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As we emerge from one of the biggest economic downturns in living memory, for professional services firms in the “built environment”, the challenges are far from over. Investment conditions remain tight, clients are seeking greater value for money, and businesses face difficult decisions about resource management and business planning.
These and other challenges were addressed by Graham Nicholson, chairman of the Association for Consultancy and Engineering (ACE) at a recent breakfast briefing in London, organised by Deltek, a leading provider of enterprise applications to professional services firms.
Businesses on the front line
ACE represents the business interests of its members in the consultancy and engineering industry in the UK. With around 600 firms - large and small, operating across many different disciplines - ACE is acutely aware of what is happening on the professional services “front line”. With member companies emerging blinking from the recession, Graham Nicholson said that ACE is focused on helping pave a way forward for professional services firms – and helping them get back to business.
“Fundamentally, our strategic aims are to be a single voice for the industry, promote members’ interests and provide support,” he said. “Whilst times have been tough in recent years, professional services firms have in the main managed fairly well.”
He cited that whilst there was a 15% reduction overall in consulting firms’ turnover in 2009 – which led to them “watching overheads and costs more carefully and becoming more efficient” – a recent ACE benchmarking exercise indicated that they achieved profitability of 6.2% in 2009 and 6.8% in 2010. The forecast for 2011 is an increase to 7.3%, despite order books currently being down by 15%. Graham Nicholson added that the indications are that “there is a lot of work about to happen”.
“Clearly, in this environment, fees charged by professional services firms need to be competitive, but we shouldn’t undersell ourselves,” he said. “We should be paid good money for the responsibilities that we take.”
Investment in infrastructure
ACE is active on a number of fronts, not least campaigning to emphasise the importance of investment in the UK’s infrastructure. To that end, it is working with the government’s Infrastructure UK (IUK), which has a remit to focus on the UK’s long-term infrastructure priorities and meet the challenge of facilitating significant private sector investment over the longer term. Some £200 billion of investment is planned over the next five years, across the key economic infrastructure sectors (energy, transport, waste, flood, science, water and telecoms).
The majority will come from the private sector. IUK also supports the delivery of major infrastructure projects where there is capital investment from the public sector. For example, ACE is supportive of the delivery of Crossrail, broadband UK, smart meters and a range of other projects and programmes.
Skills needed
As well as investment, Graham Nicholson expressed concerns about the future skills shortage in the industry. “Recruitment overall is down on previous years, so we really need to focus on this to ensure that we have the right level of skills in place for the future,” he said.
The success of professional services firms will also rely heavily on what Graham Nicholson described as the “disconnect between procurement and operations departments within client firms.” He added: “We need to get closer to clients, not just at the senior management level or within procurement, but at the engineer level. We need to listen to and understand their problems and requirements and provide services that target their needs.”
He concluded: “Our industry has the skill, imagination and ingenuity to transform the way we do business in this country, so we should grasp the opportunities that we have.”
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