Professor Bruce Tether of Imperial College London is exploring recent history to understand the past, present and future trends and management challenges facing engineering consultancies. Here he explains his initial findings.
These are terribly difficult times. The Labour governmentis struggling witha country on the verge of bankruptcy. But this is not 2009, it is 1979, 30 years ago, before Margaret Thatcher became prime minister. The year when NCE
published the first edition of itsConsultants File.
Over the last 30 years, NCEhas charted the good years andbad for Britain’s consultingengineers. In 1987, for example,NCE proclaimed: “Consultingengineers have never had it sogood,” while 2004 was “a bumperyear” … “business has never beenbetter”. By contrast, in 1980 NCE reported “last year has been difficult for consulting engineers”, and in 1993: “Consultants are having to grit their teeth while business life remains very tough.”
Surprisingly, we have traced only 15 firms (or their direct descendents) that have appeared in every edition of the file between 1979 and 2008
Overall, following a brief review of 30 years of Consultants Files, three things stand out: First, that despite the ups
and downs, the last three decades have seen spectacular growth and achievement by Britain’s engineering consultancy firms. Second, that the fi rms tended to ride out the storms of recession rather well. In 1981, for example, NCE reported that “British consulting engineers are weathering the recession with remarkable resilience”, and in 1992: “Consulting engineering has borne up remarkably well so far in the face of the deepest and longest recession in memory”. Third, it is remarkable how quickly, and unexpectedly, the tide can turn.
In 1989 NCE heralded the boom: “Never in the history of their profession have consulting engineers enjoyed such good times.” Two years later firms were “battling with recession,” with work having “vanished almost overnight”, and firms which had until recently been enjoying their greatest ever surge of growth being forced to makeredundancies. If history is any guide we can therefore expect British consulting engineers to hold up rather better than many other sectors of the economy, and to enjoy some significant growth opportunities when the recovery comes.
Thirty years ago, the first edition of the Consultants File identifi ed just seven firms - “the big-seven” - with over 1,000 employees: Ove Arup & Partners; WS Atkins Group; Binnie & Partners; Sir Alexander Gibb & Partners; Sir
William Halcrow & Partners; Merz & McLellan and Scott Wilson Kirkpartick & Partners.
In 2009, the File records not seven but 30 firms with over 1,000 employees, including five - Atkins, Mott MacDonald Group, Mouchel, Arup and WSP - with over 10,000.
There have of course been some remarkable individual growth stories. WSP, for example, began as a building services consultancy in Surrey, which became a private partnership in 1974, floated on the London Stock exchange
in 1987 - at which time it had 80 employees and an income of £32M. By the end of the 1990s the headcount was around 2000, and by 2007 that had become 9,500, earning £500M in fees. Much of this growth has been through acquisition, but it is nonetheless spectacular. Our research to date, based on the Consultants File, finds that
845 firms and other organisations (mainly public sector departments or agencies) have appeared in the File at least once. Perhaps surprisingly, we have traced only 15 firms (or their direct descendants) that have appeared in every edition of the file between 1979 and 2008.
The 15 are Arup, Atkins, Babtie (now Jacobs), Binnie (now Black & Veatch), Curtins Group, Aecom Faber Maunsell (previously Maunsell and Oscar Faber), Fairhurst, Gifford, Halcrow, Hyder (previously Acer and John Taylor/Freeman Fox), Montgomery Watson (previously Watson Hawksley), Pick Everard, Posford Duvivier (now Royal Haskoning), Scott Wilson and the Waterman Group.
This select group includes some of the industry’s largest players, such as Atkins, Arup and Halcrow. Atkins in particular has experienced impressive growth, going from 2,200 employees in 1980 to around 18,000 now. But
the development of the smaller firms is no less interesting. Gifford, for example, is recorded as having 75 to 100 employees in the first edition of the Consultants File. It remained about this size until the mid-1980s, after which it began to grow, breaking 200 employees in 1992, and 300 employees in 1996. The late 1990s saw a little contraction in headcount, before growth resumed in the 2000s, with numbers reaching 500 in 2004 and nearly 900 now.
WA Fairhurst had 300 to 400 employees in the 1979 File, and remained around this size until 1990, when numbers
almost reached 500. It then contracted again, but the late 2000s once more saw the headcount exceed 500.
Although it may lack the high profile of other industries, design and engineering consultancy, including architecture, is certainly a significant area of business in the UK. Offi cial statistics show businesses in these activities employ around 400,000 people in the UK, a total which has been rising consistently in recent years
and which is roughly equivalent to the population of Bristol, or a suffi cient number of jobs for a city the size of Birmingham.
As we enter what is expected to be a deep and long recession, it is increasingly important that not only practicing managers but also government and educators understand how the UK can build on its strengths. Design and engineering consultancy is certainly a UK strength. Arguably, however, it is a strength about which government and educators preparing the next generation of managers know little. Indeed, the 1979 Consultants File reported that “very little is known about [consulting] fi rms”, and three decades on I suspect little has changed beyond the industry itself. For management, education is essentially framed around product manufacturing, which is a far cry from the relational service model of consultancies: in short, the management model is different. Government is also waking up to the significance of these and other professional services as important components of the UK economy.
Partially to further that understanding, the government has funded - directly through the Department for InnovationUniversities and Skills and indirectly thorough the Economic and Social Research Council, the Technology Strategy Board and the National Endowment for Science Technology and the Arts; a new research centre - the UK Innovation Research Centre - hosted at Imperial College London Business School; and the Centre for Business Research at the University of Cambridge. One of the early fl agship projects of this centre explores the developmentof design and engineering firms, their management challenges, and how they inter-relate with the rest of the economy.
Imperial College London is keen to hear from senior partners and managers who have long experience in theindustry, with interesting tales to tell about how their firm has developed, and whether this was planned or, more or less by accident.