Top 250 Consultants 2006: And they’re off!

There’s no doubt about it – consultants are firing on all cylinders. Building’s annual review of the sector shows an industry fuelled by massive government investment, reviving commercial markets, Olympics-inspired confidence from investors and developers racing to get their projects out of the way before the 2012 building boom begins in earnest.

There is steady growth across the board. The industry now employs 91,000 people, 8.5% more than last year, and 40,000 of them are chartered, 9% more than last year. The 220 firms who responded to our survey earned a total of £5.6bn in fees, an increase of 11%.

Atkins is still undoubtedly king of the road, with nearly 6,000 chartered staff. Mott MacDonald, in second place, has only a meagre 1,700. Mouchel Parkman appears in our top 10 for the first time, in fifth place just behind Capita Symonds; both these firms are reaping the benefits of public sector investment. Halcrow Group on the other hand has decided to pull out. The firm that was second in last year’s table has only put forward figures that relate to its subsidiary, Halcrow Yolles, which appears at 60.

For the first time, we are including a table of the 50 fastest growing companies. Stewart McColl’s highly acquisitive SMC Group tops this list, accelerating at the extraordinary rate of 169% on last year. It is a new entry in the main table at 32.

There was a fair bit of corporate upheaval this year. Notable examples were Capita Symonds, which is sticking to the acquisition trail, joined by WSP Group which spent £3.5m on new businesses, and White Young Green, which absorbed four firms including Tweeds. Many firms have set up new offices, both here and abroad, and there were several international manoeuvres – Cyril Sweett completed the acquisition of an Irish subsidiary, while Turner & Townsendracked up a number of mergers, one in Ireland, others in Australia and the Middle East.

Margins appear to be up, continuing a small but significant trend over the last four years. For the first time, the proportion of firms reporting level margins is below half, with 43% reporting higher margins, up from 38% last year. Now more than four-fifths of firms make a profit margin of better than a 4%. Regeneration is definitely moving up the political and investment agenda – 17% of fee income came from this kind of project.

Clients also seem to be paying up more quickly, although 60 days remains the overwhelming preference.

Winning work and buying up companies is all very well, but in this league table firms are placed according to how many people they employ. With a desperate shortage of talent to go round, the strain is clearly showing. Two-thirds of firms admitted that recruitment difficulties were holding back their growth, even more than said the same thing last year.

Although staff numbers have risen by nearly a tenth across the industry, that is not enough. Almost every firm – 94% – said they were looking to recruit over the next six months, and salary rises are more likely to beat inflation than they were five years ago.

Worryingly, the average age of staff has gone up. Three years ago it was 35, now it’s 38, reflecting the dearth of new people coming up the ranks. And those hard-pressed consultants are working much harder by the look of things. Despite companies’ emphasis on family-friendly, flexible working policies, the proportion of staff who use them has dropped. At two-thirds of companies, fewer than 10% of staff take advantage.