This year’s survey reveals frustration as fee income slows and margins are squeezed, but there is still hope that recent government announcements will spur growth in the year ahead and beyond. Carl Brown reports
This time last year Building magazine asked: “Are we about to see a boom time for construction?” With a new government about to take the reins, hopes were high for an era of construction-fuelled growth for the UK.
Fast forward 12 months, and how much closer is this vision of sunlit uplands to becoming a reality?
The results of this year’s Top 150 Consultants survey show we have a long way to go.
From squeezed margins, rising inflation and pessimism about the general economic outlook to scepticism about the performance of the new Labour government, there is a sense that the good times have yet to quite get going.
Despite this, a higher proportion of the consultants than last year are expecting trading conditions to improve. This suggests the hope for a boom, driven perhaps by recent government policy announcements on housing and infrastructure, is not quite extinguished entirely.
“The industry has had a stagflatory year which could be affecting the score for optimism now, but then some of those announcements could be pepping up the score about trading conditions in the future,” says Mark Cleverly, partner at CPC Project services.
More of which later. But first to the table itself, which is ranked by default by UK fee income (although our interactive online tables allow you to sort the firms by various metrics)
This year saw the same four firms at the top, in the same order, namely AtkinsRealis, Mott MacDonald, WSP and Aecom.
>> CLICK HERE TO READ THE FULL TOP 150 DATA <<
Architectural giant Foster and Partners entered the top 10 this year by increasing its fee income 27% to £369million. Canadian engineering firm, Stantec, buoyed by its acquisition of Hydrock, also entered the top ten, rising two places.
Among the top 20, notable other large increases in fee income were seen by Rider Levett Bucknall and Ridge, who grow their income by 27% and 17% respectively.
There were 43 new entrants on the list this year, with Newmark 19th and Kier’s new design business at 23rd.
On the up: Firms posting big jumps in the rankings or large fee income increases
Among the top 20 this year the biggest percentage increases in fee income were posted by architectural giant Foster & Partners, which increased its fee income by £79m to £369m, a rise of 27%.
RLB also increased its fee income by 27% to £163m. Andrew Reynolds, chief executive UK and Europe at RLB, said the firm’s understanding of its markets, along with its independence and agility to seize opportunities “led to success in core and developing sectors including the advanced technology, sports and entertainment sectors.”
In cash terms, Mott Macdonald led the way, bringing in £169m more fee income this year compared to last. Richard Risdon, executive board director and regional managing director for UK and Europe at the firm, said: “We maintain a closeness to both the selected markets in which we operate and the clients we support, as well as a continued focus on our chosen growth pathways. This focus certainly contributed to the solid performance delivered by the UK and Europe region in 2024.”
The consultant rising the most places in the rankings wasmultidisciplinary firm Bailey Partnership, jumping 14 places to 64th. It was followed by Manchester-based Corelain, which rose 13 places to 130th and Keegans, which jumped 12 places to 93rd. Andrew Morrison, managing director of Keegans, said the growth was a direct result of the firm upskilling in ”key areas such as retrofit services and building safety/fire assessment”. He added: “As the demand for decarbonisation and enhanced building safety continues to rise, we have equipped our team with the expertise needed to meet these critical challenges”
Conisbee and Rund also each rose nine places, to 90th and 86th respectively. Richard Mussell, managing director of Rund, said: “Our continued success is driven by consistently attracting and retaining top talent, harnessing data to improve efficiency and collaborating with clients to enhance our services.” Mussell said Rund has strengthened its position in the residential market.
Among the highest new entrants were Newmark at 19th and Kier’s new design business which placed 23rd.
Jordan Flint, managing director at Kier Design, said: “Being one of the highest placed new entrants on this year’s Top 150 Consultants is testament to the strength of our internal design capability…We have organised the Kier Design business into simple and clear capabilities that cover all parts of the built environment.”
A total of 32 firms reported a drop in income, which is up from last year’s figure of 23.
Fee income increased year-on-year by 8%, which is a smaller increase than the 11% in 2024 or the 16% seen in 2023. Some of this slowdown in fee increases will be due to lower inflation. The Consumer Price Index measure was still 10% in early 2023, it dropped to around 2.5% by the end of last year before ticking up again recently.
Fee income
However, Cleverly suggests inflation isn’t the whole story and expects the fee income increase to drop further next year.
“The traditional development sectors are facing headwinds. Residential pipelines are affected where there are high risk buildings [requiring building safety approval[. In the commercial sector there are a lot of deferred projects where clients are moving cautiously and development is highly reliant on debt finance, which is expensive, and construction costs remain high, all of this means it’s hard work”, he says.”
Iain Parker, director, Head of London Cost Management at Turner & Townsend Alinea, agrees.
“When it’s tough for clients, they will chip away at everything and they’ll try to make the building cost less,” he says.
Percentage of fee income by sector
“They’ll try and make their consultant team cost less and there’s always someone willing to half their fee or reduce their fee just to get, the job.”
But where did the fee income the consultants did manage to land actually come from? We compared the percentage of total income from each sector and compared it to the figure for last year’s Top 150 Consultants.
Utilities (which rose by 3 percentage points), offices (2.6) and housing (2.5), and other infrastructure (1.4) all took a slightly bigger part of the pie. Conversely the largest falls were in transport (4.3), ‘other building’ (3.3) and retail (1.7)
Cleverly says: “There is a general downturn in transport spending and those that are heavily leveraged in rail and road, some of them are finding it a challenge to pivot into the kind of thriving sectors of clean energy, water, nuclear and defence.” Parker says he was surprised offices showed a positive figure. “Health and science are bubbling okay but I think offices are tough currently,” he says.
So fee income increases may have slowed, but how has profitability been affected?
This year 34% of consultants reported margins increasing, this is an 11 percentage point drop on the 45% reporting rises the previous year. Similarly, the percentage of consultants reporting average operating margins of 15% or more fell from 31% to 28%.
On average, in what direction are your margins moving?
Cleverly says this could be in part due to the amount of downtime on projects increasing as a result of planning hurdles, section 106 agreements, funding issues or building safety approvals. “The downtime impacts on the margin,” he says.
“There is also upwards pressure on staff costs around cost of living, and employees bringing that forward to employers. Employers are having to put wages up, but are maybe not able to pass those costs on to clients where they’re operating on a fixed-fee basis,” he says.
On average, what are your operating margins?
On the plus side the percentage of consultants reporting they are doing more work for less income has fallen from 41% to 38%, although this is still higher than the 33% reported two years ago.
Compared with 2023/24, what best describes clients’ demands?
Economic sentiment
So faced with a margins squeeze and a slowdown in fee income, how confident are the consultants about the economy?
Unsurprisingly perhaps there has been a 14 percentage point decrease in the percentage of consultants saying they are ‘positive’ about the general economic outlook year-on-year, from 40% to 26%.
Much of this shift has however gone to ‘neutral’, which has increased by 10 percentage points, with a smaller five point increase in ‘negative’. This suggests that many in the industry, while not as positive as last year, are undecided as to whether the general economy is in a good position to grow or not.
What is your view concerning the general economic outlook?
When asked about expectations regarding trading conditions over the next 12 months however, 45% of respondents said they expect an improvement, up from 42% a year ago. It’s worth noting that the bulk of the survey responses were submitted after the 11 June spending review, which contained bigger than expected funding announcements for affordable housing, and the publication of the infrastructure strategy.
This could explain why the respondents are negative about the general economic outlook right now but are more hopeful of things picking up within 12 months.
What are your expectations regarding trading conditions over the next 12 months?
There is also little evidence that the stagflationary environment of the past few months– in which growth is low but inflation is ticking up – is affecting the consultants’ staffing levels or salaries.
The percentage of staff saying they have laid off more than 10% of staff has stayed steady at 3%, as has the percentage saying they have laid off between 5% and 10% of staff.
Are you planning to increase, leave unchanged, or decrease staff over the next 12 months?
What percentage of staff have you laid off over the past 12 months?
All respondents (100%) said they are planning to increase salaries or leave them unchanged over the next 12 months, up slightly from 99% last year.
Biggest risks
Each year we ask consultants to rank the biggest risks facing their business and then we aggregate the scores into an overall ranking. This year, macroeconomics conditions and their impact on markets was again first in the list, with geopolitical events also in the top three.
In its response, an AECOM spokesperson said: “Macroeconomic uncertainty and a volatile geopolitical environment continue to impact market conditions, although the sector is well-positioned to take advantage of the opportunities ahead.” It added the spending review however should provide a positive outlook due to extra infrastructure spending.
What do you see as the biggest risks facing your business?
| Risk | 2024/25 rank | 2023/24 rank |
|---|---|---|
| Macroeconomic conditions and their impact on markets in which the business operates | 1 | 1 |
| Attracting, developing and retaining staff and skills | 2 | 3 |
| Geopolitical events including upcoming elections, international wars etc | 3 | 2 |
| Government regulations, such as new obligations under the Building Safety Act | 4 | 4 |
| Financial health of the business and its ability to access funding and maintain liquidity | 5 | 6 |
| Climate change | 6 | 5 |
A Bellrock spokesperson said: “Continuing wars in Ukraine and Israel have significantly drained our financial resources. Now the tariff uncertainty in the UK will impact. However, in times of need e.g. covid, we were able to make things happen for the greater good.”
Government regulations remained fourth in the list. Jones Lang LaSalle said its concern has shifted from macroeconomic conditions and geopolitical events to new regulatory pressures “particularly the Building Safety Act and the knock on impact felt to project programmes and viability as a result of the building safety regulator backlog.”
Multi-disciplinary consultancy Potter Raper said: “Government regulations (BSA) have slowed development to unacceptable low levels.”
Attracting, developing and retaining staff and skills rose in the rankings this year to second place.
Engineering firm Elliot Wood Partnership said: “The skills gap continues to be a concern across the built environment sector. There has been a huge talent drain and we think this has caused as much issue as rising materials prices. We see an incoming risk of poorer quality work in the market which clearly we cannot afford to have.”
Turner & Townsend Alinea’s Parker says construction skills across the industry, be it designers, surveyors, consultants, trades or contractors, have “deteriorated gradually” every year. “What’s allowed us [the industry] to carry on is the fact that the pipeline has been really quite slow, but the minute that we start to get busy again- and one hopes that that’s sooner rather than later- I think you’re going to see that [problem] hit.”
Climate change dropped to the bottom of the list of risks this year, with many consultants saying while it is an important issue it is of less immediate short-term concern than some of the others mentioned above. Ridge & Partners said: “Climate change and government regulation provide as much opportunity as they do challenge if approached well.”
Investment priorities
Climate change may offer opportunities, but one of the eye-catching findings of this year’s survey was a marked drop in the percentage of consultants saying they intend to increase spending on net zero service offerings. A total of 60 per cent of respondents said they intend to increase spending in this area, down from 81% last year.
What is behind this 21 percentage point drop?
Do you intend to increase, maintain or decrease spending on any of the following?
| Area | Increase | Maintain | Decrease | |||
|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |
| Investment in digital technology (software, IT and artificial intelligence products) | 84% | 78% | 16% | 22% | 0% | 0% |
| Investment in skills (retraining and upskilling) | 67% | 73% | 33% | 27% | 0% | 0% |
| Improving net zero services offerings | 60% | 81% | 39% | 18 | 1% | 1% |
| Improving productivity | 79% | 73% | 20% | 26 | 1% | 1% |
| Physical assets (office space, hardware etc.) | 35% | 30% | 59% | 61 | 6% | 9% |
| Staff recruitment | 64% | 60% | 34% | 38 | 3% | 1% |
Cleverly speculates it may not be a case of the industry deprioritising net zero, but more that lots of companies have already made upfront investments to launch or scale up their offerings and now just need to “be working on what they are doing.”
“I think people feel better equipped. They’ve had long enough to work on it and adapt and work out what they’re doing”, he said.
Net zero was replaced in the number one investment priority spot by “digital technology ((software, IT and artificial intelligence products).”
This isn’t surprising when you consider 89% of respondents said they considered AI and machine learning to be “extremely” or “very” important to the transformation of their business over the next decade. <<Click here to find out how AI is saving the consultants money>>
The Labour government
Having priorities for investment is all very well but the industry will be looking to the government to create the conditions for growth.
Keir Starmer’s Labour party had been power for almost a year at the time the Top 150 Consultants survey was carried out. So how does the industry thinks the government is doing?
At first glance it looks as though the answer is ‘not well at all’. None of the 159 consultants answering the survey rated the performance of the government in supporting the built environment as “excellent”.
Please rate the performance of the current UK Labour Government to support the built environment sector since it was elected last year
Just 12% think Labour is doing a “good” job and nearly three in 10 (28%) answered “poor” or “very poor”.
However it must be noted that more than 60% of respondents answered “neutral” to the question, suggesting the industry has yet to fully make its mind up and is waiting to see if the government’s announcements on housing and infrastructure, along with planning reforms, can drive more growth and work. “There’s a lot of longer term announcements and you could see that those 61% are saying “we will reserve judgement until we see the fruits of that come through [or not”], says Cleverly.
We also repeated the question we asked a year ago about what the priorities for the Labour government should be to boost the construction sector.
Once again, public sector investment certainty, planning and infrastructure reform and skills emerged as the top three areas. With its policies on affordable housing and industrial strategy and its overhaul of the planning system you could argue the first two of these are being grappled.
Tax reform notably rose in the list, from sixth to fourth. It would be tempting to see this as a direct response to the National Insurance contribution increase in last year’s Autumn Statement but Cleverly and Parker speculate it comes from a broader desire for help to get projects moving in a difficult environment.
What should the priorities be for the current Labour party administration to boost the fortunes of the construction sector? (choose in order of priority)
| Priority | 24/25 rank | 23/24 rank |
|---|---|---|
| Public sector investment certainty | 1 | 1 |
| Planning/infrastructure reform | 2 | 2 |
| Skills | 3 | 3 |
| Tax reform | 4 | 6 |
| Net zero | 5 | 4 |
| Procurement reform | 6 | 5 |
Parker says: “ Any incentives or tax reform to just try and help to get projects off the ground is welcome. I’ve been in the industry for 38 years, and I genuinely cannot remember a time in my career where it’s actually been so difficult for developers. They are getting hit from all angles, whether it’s interest rate rises and cost of finance, or planning slowness, cost of construction, legislative changes or net zero targets, they are getting it from all angles”.
Cleverly agrees. He says the government is “struggling to create short to medium term growth” and says reforming, reducing or eliminating stamp duty might be a way to breathe life into what he terms a “zombie housing market.”
>>Click here to find out more about the consultants think of Labour’s performance to date.<<
The industry is clearly having a frustrating time in a slow market, with fee income growth slowing and margins being squeezed, amid constraints around regulations and skills shortages in a febrile global economy.
However there is still hope that things will improve, particularly if some of Labour’s recent policy announcements have the impact many are hoping for.
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