Bill De Angelis, P.Eng., MBA, Director of Engineering,
Azurix North America Engineering Corp.
The days of the traditional, single focused consulting engineering firm are waning in North America. Many clients are now demanding a range of engineering skills from their service providers. Market forces are driving this change. Competition generated by multiple consultants in a limited market place continues to generate bidding wars between professional firms to secure projects, in the name of lowest price (but not necessarily best value) to clients.
Downsizing in municipal bureaucracies has reduced the ability of many to plan, design, tender, and administer new and expansion projects in the environmental industry. Key staff in all environmental sectors have retired, leaving many potential clients with gaping expertise holes they have little chance to fill, requiring external hiring or contracting of engineering expertise. Shedding of liability is a hallmark of client behaviour in these times. Minimizing risk is a very attractive proposition in both the public and private sectors today.
How do consulting firms operate efficiently and cost-effectively in today's market place? We either stay very small and attack a niche market (such as software programming), or change the way we do business. Size matters when it comes to setting a business strategy in the consulting engineering sector. Many clients like the perceived stability of a large firm. Therein lies the paradox: to get work, you need to be large, but it's easier to be profitable when you are small.
Competitiveness in consulting is directly proportional to the competence of your team, and inversely proportional to overhead cost burdens. Continued profitability requires close attention to both. One approach to maintaining competitiveness and profitability is to diversify revenue streams, accumulating income from several sources while spreading the risks associated with bidding and managing projects. This is accomplished by adding business lines to the firm's portfolio that may be quite different from the status quo. New Age consultants are not necessarily constrained by the old paradigms of consulting engineers.
Another approach is through the use of vertical integration within the company structures, allowing the engineering function to provide professional expertise to other business lines, while continuing to seek third party work. Those lines could include Operations, Design/Build, Project Management, Finance, Construction, and others. The hybrid consultant enters into alliances or "virtual teams" with other consulting professionals, combining resources and skill sets to improve competitiveness and attractiveness. In fact, some clients insist on teaming arrangements because they recognize that no one firm may have all required disciplines or strengths for a particular project.
Flexibility in project delivery methods and mechanisms improves the success or "hit" rate on jobs, using conventional versus design/build approaches. Again, any mechanism the client can employ to reduce cost to owners or ratepayers is worth investigating.
Open-mindedness, flexibility and response time are key to success in the operation of our businesses. This concept is currently being applied by many firms south of our border. US firms are more and more often being seen on bidders lists for Ontario projects, and some of our traditional client base is actively soliciting US firm participation in engineering projects in our province.
If we are going to continue to successfully compete for work locally, we have no choice but to evolve into multiple service providers. The work is out there. Our engineers can compete with anyone in the world. However, all the skills in the world are no good if they cannot be put to good use. Much as many of us hate to admit it, we need to change the way we do business if we are to continue to flourish.
See our home page on how to order your subscription. We regret we can only accept orders from Canada and the United States.