The firm, which is also closing two regional offices, blamed rising costs and static fees for the retrenchment.
This cutback is the latest example of a QS practice that has been forced to make savings by reducing staff after finding that it was unable to pass on increased costs to clients. One source at a top 10 QS said that some firms are winning work at fee levels of less than 1%.
The fee squeeze comes at the same time that graduate surveyors’ salaries have risen by more than 15% in London and as much as 8% in the regions, as the Building/Hays Montrose consultants’ salary guide shows. Franklin + Andrews’ move was announced after a year-end review of staffing and organisational structure. It is understood that up to 10 staff have been made redundant at the London headquarters and that most staff at Middlesbrough will lose their jobs. The Bristol office will close in June, and work will be transferred to Cardiff, along with the two staff who run the office.
The senior partner at another top 10 QS said he was surprisedthat Franklin + Andrews was shedding staff at its London office. He said: “If a top-notch firm like Franklin + Andrews is doing this, it must be symptomatic of a general trend. It is a sign that consolidation at the top is coming and those players that survive will have a strong increase in the market share.”
It seems ridiculous but in a bloody busy market we are not making any more money
Source at QS Practice
A number of small and medium-sized QS firms are trying to find a way out of their difficulties by approaching larger rivals with a view to being absorbed.
Another QS said: “It seems ridiculous but in a bloody busy market we are not making any more money. Costs are rising, but cash flow is a serious problem for all QSs. Many blue-chip clients are reluctant to pay on time and a 30-day debt can easily become 100 days.”
In a letter to London staff dated 3 April, Franklin + Andrews partner Kevin Arnold outlined the reasons for the redundancies at the London headquarters. The letter says: “Despite the current level of business activity in the building sector, the marketplace for our skills and services remains pretty fierce.
“Inevitably (and sadly) this translates into static fee levels against a rising cost base for our business. What is more, the projects that offer the sort of quality earnings that we are interested in are just as difficult to secure in the first place.”