The master strategy: Can a QS be a management consultants

It was quite the gauntlet. Last week Rob Smith, senior partner at Davis Langdon, announced that the firm planned to transform into a “McKinsey-like” consultant for the “built, natural and social environment”. Name-checking the world’s premier management consultancy was a bold move, and one that raised an interesting question for the rest of the industry: could UK firms with their roots in quantity surveying become the elite management consultants?

Management consultancy - offering advice to businesses long before building plans are on the drawing board - is nothing particularly new for QSs. Most now rely on it for a sizable and growing chunk of their revenue (see box, overleaf). EC Harris, which rebranded itself as a “built asset consultancy” in December 2008, says that what it calls “pure strategy work” has increased by 50% over the last two years. But while it’s a nice little earner, picking a fight with mega-consultancies such as McKinsey, Pricewaterhouse Coopers, Deloitte and KPMG on their own turf is a very different task.

For Davis Langdon (DL), management consultancy made up just 4% of revenue in Europe and the Middle East in the financial year 2008-9. It has not claimed it will compete with McKinsey in every area - just where construction, infrastructure and asset management are concerned. But if it did manage to give McKinsey a run for its money in just one sector, it could blaze a lucrative trail for the rest of the industry to follow.

Playing in the big league QS consultants are currently seen as one or two places below McKinsey in the consultancy pecking order. “At the top are the likes of McKinsey, and then slightly below them the big four [Deloitte, KPMG, Ernst & Young, Pricewaterhouse Coopers],” says one Cyril Sweett director. “Then comes the middle range: companies like EC Harris, DL and Mouchel, as well as individuals.”

Consultants from McKinsey and other top-tier firms are generally paid 50-100% more per hour than professionals from a QS firm. Smith would not be drawn on the extra money the move up could make DL, but when a top brain from McKinsey can bring in £3,000 a day, it’s hardly surprising the company wants to move into this league.

So, how likely it is to succeed? Well, DL has made a start. In a recent contest for an “asset optimisation” contract for a “big global client”, it says it was picked over McKinsey, Deloitte and Gensler. It has also set up a team to undertake this work - Knowledge Agenda, as it is officially known. Erland Rendall, director of DL’s Abu Dhabi office, is to head up the Knowledge Agenda and under him will be a team of about 20 people.

Yet industry figures are sceptical. Many admire Rob Smith’s ambition, and all agree that “getting under the skin” of clients as early as possible is the way of the future.

But some question how quickly DL can transform itself and its reputation. “It’s quite a leap,” says the head of a rival QS and project management firm. “It’s a space where there are a lot of people. There will be a lot of competition.”

Others question the lack of specifics. “What hard numbers are they putting forward?” asks Jonathan Hook, UK construction and housebuilding leader at Pricewaterhouse Coopers. “What revenue estimates?”

The skills to do the job

As DL prepares for the big push, some in the industry have also questioned whether it has the skills needed to do the job. As a top management consultant, it will need to offer clients far more than quantity surveying with a bit of strategic knowledge on the side. But it seems that since the deal with Aecom, the relevant people are flowing out, not in. Simon Rawlinson, who was prolific in writing McKinsey-style research pieces, has left to head up EC Harris’ strategic research team.

DL CVs are flying across the desk of one highly placed source at Drivers Jonas. Perhaps the applicants are betting that Drivers Jonas, which was bought by Deloitte in January, is now in a much better position than DL to move into the McKinsey market.

Then there’s the question of whether trained QSs can be turned into management consultants. “Does a good footballer become a good football manager? Do you want Wayne Rooney managing your team?” asks Michael Thirkettle, chief executive of McBains Cooper. “In McKinsey people are brought in with a business mind, but people in our industry need to have developed into that.”

Then there’s the scale of the mountain to climb. One source illustrates just how lofty McKinsey’s reputation has become. “There’s a joke in the health service: ’No one has ever been sacked for employing McKinsey’,” he says. Jeffrey Skilling, a former McKinsey high-flier who became better known as chief executive of Enron, infamously said the firm was “doing God’s work”.

Can a British QS such as Rob Smith adopt such religious levels of self-promotion?

We will have to wait and see. Given its reputation as the Rolls-Royce of quantity surveying, however, DL looks like the right firm to lead the way.

The industry’s view

Richard Steer, senior partner at Gleeds, offers Davis Langdon this advice. “Don’t bid too low, and you have to have people who are specialists,” he says. Snatching the best clients away from established consultants will be an enormous task, because “Pricewaterhouse Coopers and Deloitte have entries into the highest levels of corporations and government”.

The industry should aim high - but not too high, according to David Bucknall, chairman of Rider Levett Bucknall. “We can compete with McKinsey on business studies, but at the level of geopolitics, of advising governments, probably not.”

Steve McGuckin, UK managing director at Turner & Townsend, agrees. “Is T&T ever going to be advising global corporates on strategy? I don’t see it. But will we give them effective ways to spend their capital? Yes, we already are.”

“Now they’re part of Aecom I’m sure DL can do something in that space, but are unlikely to compete with McKinsey in the short term.”

A spokesman for McKinsey, rather weary of companies comparing themselves to the enigmatic consultant, which refuses even to reveal its client base, said nobody from the company would speak about DL as a potential rival. “We don’t really rise to that challenge,” he said. “We don’t indulge in that kind of debate.”

He was prepared to list the firm’s competitors: Deloitte, Pricewaterhouse Coopers, KPMG, Bain & Company, Booz Allen Hamilton and Boston Consulting Group.

What about Turner & Townsend, Gleeds and EC Harris? They drew a blank.

Davis Langdon? “I might have heard of them.” Clearly DL, like the rest of the industry, has some way to go.