Survival of the fittest: consultants in rude health - for now

Construction’s consultants are in rude health. Our annual Top 150 league table is, at least at first glance, one of those rare things: a good news story.  

The results from our survey reveal not only that overall staff numbers are up this year but also that the biggest architects, engineers, surveyors and project managers have raised salaries across the board and are planning to grow their teams over the next year.

The actual figures show that 75% of the firms in the league want to take on more staff in the next 12 months, despite that looming March 2019 Brexit date and corresponding fears that projects are stalling.

It is genuinely surprising to hear the likes of Core Five declare “We’ve just had our best year to date”

For the year just gone, two-thirds of consultants say they have grown their staff numbers. SME surveyor Naismiths perhaps exemplifies this fearlessness, nearly doubling its staff figures. A bit of data crunching shows that the average head count has increased more than 7%.

And encouragingly for employees, 90% of companies have given them a pay rise, seemingly unconcerned by the impact of Brexit potentially hitting their workloads. It is genuinely surprising to hear the likes of Core Five declare “We’ve just had our best year to date”.

Many might have presumed that the breed of “challenger” QS firms that emerged from the old Davis Langdon and EC Harris brands and tended to focus on the London commercial and resi markets would have been among the first to feel the chill winds of any downturn.

It seems that all those Brexit fears as we went into 2018 were unfounded. Or were they? While these positive figures present a bright backdrop to the year just gone, consultants are preparing for a gathering storm.

Core Five’s view is sobering; it thinks the market is on the verge of turning and it has noticed a reluctance among some commercial clients to commit to big investment decisions.

This nervousness is replicated among the giants in the sector: Aecom, in second position in this year’s tables with just under 3,000 UK chartered staff, says progress on big-ticket public sector jobs is slowing because of Brexit uncertainty. The consequence is clear – despite global headcount going up over the year, its UK business has seen staff fall by 900.

A more complex picture emerges of consultants positioning themselves for several years of lean growth, whereby they boost the numbers of their fee-earners and technical staff while cutting back on those in back-office admin and support functions. Brexit is only partly responsible.

The sense is that clients are gaining the balance of power and with budgets squeezed they are increasingly driving a hard bargain, demanding more for less, which of course hits margins.

We’ve seen this all before with contractors, and the temptation is obviously to bid low to win work. The consultants we spoke to think this is definitely happening in some sectors with some “eye-watering prices”, but the majority are not entering into a race to the bottom. That way madness lies.  

A sensible response – and one that farsighted firms are busy formulating – is to adopt flexible business models that can adapt to a fast-changing world.

Brexit is only partly responsible. The sense is that clients are gaining the balance of power and with budgets squeezed they are increasingly driving a hard bargain, demanding more for less, which of course hits margins

The current political turmoil is only one challenge, albeit this week’s rhetoric around the post-Brexit migration system will understandably bring renewed fears of being cut off from both “unskilled” labour as well as from highly qualified professionals from the EU. (On this particular point, we can but hope that the business friendly ministers at cabinet level prevail: any new migration policy needs to have the interests of the economy at its heart; politicians playing to the gallery is just a distraction.)

But there are even larger existential questions for consultants to address. If clients are pushing them on prices, commodifying their services and reducing workloads, then companies will need to react.

De-risking their activities could mean breaking into new and niche sectors, exploiting overseas markets, retraining or reallocating staff; but more than likely it is also going to mean investing in full digital transformation.

Some traditional roles and services may become obsolete during this process, and fears around change can act to block progress. But not for long. Consultants are already predicting the automation of many of the tasks that filled their days.

The optimists among them see this as an opportunity – time spent on routine tasks can be redeployed to the more creative and advisory aspects of servicing the needs of their clients. But it does leave the question hanging: what exactly is the role of a QS, an architect, an engineer, a project manager in this brave new world?

No one really knows, but the firms that are at least searching for some answers have the best chance of not just remaining in the game but coming out on top.