Enabling profitable growth

From the rising cost of growth to outsourcing models and technology investment, small and medium sized business discussed today’s pressing issues with Infrastructure Intelligence supported by Deltek.

Delek SME roundtable Dec 14

Bernadette Ballantyne reports

Small and medium sized consultants are responding to today’s buoyant market in a variety of ways, outlined attendees at the Infrastructure Intelligence and Deltek round table in December. Challenges and opportunities are being met with innovative solutions and interesting strategies from “northshoring” work out of London to “mainlining” graduates from key university courses. 

“We couldn’t do some of the work we do without northshoring, delivering work from Newcastle, Birmingham and Manchester to the London office,” said David Dryden, chairman of Cundall. He explained that unlike some of the bigger consultants the company’s regional offices do not compete with each other on income, ensuring mutual support throughout the firm. “We have a single bottom line and there is no infighting, this makes a huge difference.”

“We are certainly seeing a shift change. We are finding that clients are open to the opportunity to get better value and for that they will pay a fair price,” Neil Smith, senior partner at Max Fordham

Other firms agreed that moving the work to the appropriate cost base, whether in the UK or overseas, was key element of ensuring sustainable growth. “We set up our London office with the intent to undertake the bulk of detailed design work from our ‘engine room’ in our Midlands heartland where employment costs are much lower. Although that’s still a lot more expensive than, off-shoring to Asia it’s much easier to manage delivery and quality,” said Steve Wooler, managing director at BWB. 

Firms were unanimous in their view that the market was growing and that ensuring that this growth is profitable is a challenge considering the rising costs from existing staff salaries to resourcing new projects. This means that the tide is slowly turning from a buyer’s to a seller’s market for consultancy services. “There is more work and then you need more staff and it costs a lot and then margins fall as fees are still low and payments are sometimes late – so it has to be really good work or we may say no,” said Paul Menzies, executive director at structural consultant Curtins.

Others agreed that the industry is currently in a transition phase. “We are certainly seeing a shift change. We are finding that clients are open to the opportunity to get better value and for that they will pay a fair price,” said Neil Smith, senior partner at Max Fordham.

However on the flip side some companies said that many clients were still in recession mode making decisions on the basis of lowest price. “Aspirations don’t always match reality; companies may say they seek value, but when it comes down to it the guys running the project still appoint on the basis of cheapest price,” said Wooler

“We looked at business management systems and we have really been put off by the cost, which can reach 6 figures. I almost think we need a “light” version to cater for the SME industry,”  Neil Sandberg

Ensuring a fair price is paid, and profit is made also means that some firms are renegotiating contract terms with their clients, and in some cases walking away, as well as taking a closer look at their costs. “It is all about profitable growth, organisations are taking an almost forensic approach to their cost base to be as competitive as possible and also to make acceptable margins at the same time. Rather than just look at the overall project,  people are breaking down the various elements to ensure that each part of it is profitable,” said Fergus Gilmore, managing director, Deltek.

Investing in new technology to support this and stay ahead of the curve when it comes to industry development was also outlined as a key issue for firms. BIM for example has now been widely adopted but there remain teething troubles. “My difficulty with BIM is that it is supposed to be a consistent, collaborative system for working but there are so many different clients out there with many different ways of working, and different demands on how BIM is presented to them, that we have to invest in all the systems and the cost is quite phenomenal,” said Graham Nicholson, executive managing director at Tony Gee and Partners LLP.

The advantages of BIM however are being realised. “One of biggest benefits we see in BIM is people thinking outside the box. We come up against barriers where people say ‘this is not part of my job’. It may not have been 2 years ago but, actually, it is now and that is driving some real excitement as it is making people’s roles more dynamic,” said Andrew Almond, partner at Pick Everard.

For internal management firms debated the use of ERP systems and admitted that the cost was a deterrent. “We looked at business management systems and we have really been put off by the cost, which can reach 6 figures. I almost think we need a “light” version to cater for the SME industry,” said Neil Sandberg, managing partner at Sandberg Consulting Engineers.

Interestingly Deltek agreed and said that in the past it had not been able to provide a solution tailored to smaller companies, however recently this has changed. “The truth is that 2 years ago our solution was not tailored to meet the needs of a small business. We have now invested  thousands of hours of research finding out the relative needs of small to medium engineering firms to create a best practice standardised model which can be fitted to your company at a cost suited to SMEs and in a much shorter time frame,” explained Deltek senior business director Chris Duddridge.

This is a significant acceleration from the 100 days that a bespoke ERP model would have required in the past. However Gilmore warned that investing in technology alone is not enough to derive the potential benefits. “Technology without a change management strategy is a waste of money. It is really important that anyone looking at an investment in technology considers the change aspects to make sure the investment is very successful.”


Steve Wooler, managing director, BWB Consulting

David Dryden, managing partner, Cundall

Neil Smith, senior partner, Max Fordham

Andrew Almond, partner, Pick Everard

Elizabeth Brown, partner, CampbellReith

Graham Nicholson, executive managing director, Tony Gee and Partners LLP

Paul Menzies, executive director, Curtins

Mark Ingram, managing director, GHA Livigunn

Paul Jackson, director, NG Bailey

Tushar Prabhu, director, Pell Frischmann Consulting Engineers

Neil Sandberg, managing partner, Sandberg Consulting Engineers

Fergus Gilmore, managing director, Deltek

Chris Duddridge, senior business director, Deltek

Beyond the technology firms are also investing in people, particularly graduates and in some cases apprentices. “We cultivate relationships with our local universities and try and identify students and get them in for the summer and if we like them we will sponsor them for the rest of their degree,” said Mark Ingram, managing director at GHA Livigunn.

Other firms too said that they have built links with Universities, in some cases by giving lectures and tutorials. “There is a symbiosis here because if Universities can show that link with industry it helps them to attract students,” said Liz Brown, partner at CampbellReith.

At Tony Gee and Partners, Nicholson said that the firm sponsors 40 students through University which has been “enormously successful” with an 88% retention rate. It is also one of only a few SME consultants to take on apprentices through the Technician Apprenticeship Consortium. “If we take on an apprentice between 16 and 18 it gives them the opportunity to get on to the ladder that can take them all the way to Chartership,” he said.

Another area where SME firms are recruiting is in absorbing some of the staff that leave companies that are in the midst of takeovers or mergers. Others such as NG Bailey said that they were successfully re-hiring some of the staff that had to be let go during the recession. 

A lesson that some firms have learned from the recession is to be more commercial regarding cashflow. In November the ACE revealed statistics from its latest SME Benchmarking study which highlighted that the average payment term was 81.5 days and 50 % of these payments were beyond the contract terms. Some firms said this was actually higher and said that they were working to bring this down, but some felt that 30 days was an unrealistic expectation. However others pointed to exemplar clients that pay within 21 days. “We have benefitted tremendously from that, and it is the sort of regime that we expect,” said Paul Jackson, director at NG Bailey.

From the discussion it was clear that the variety of clients have many payment terms from banks that demand discounts for payments within 60 days “Why should I fund a bank?” said Dryden; to some that offer large advance payments and monthly income. Firms have responded to this in a number of ways. “On our oversees projects we are trying to negotiate away from milestone payments to giving a discount if people pay monthly. You can offer a discount because you are de-risking the project for yourself,” said Smith.

Against a backdrop of growth in revenue and staffing levels reducing payment delay is even more important. Planning for growth is indeed at the forefront of the collective minds of SMEs and is a nice challenge to have compared to the bust years. Enabled by smart graduates, new technologies, passionate engineers and forward thinking clients, SMEs are set to reap the benefits of their own innovation.

If you would like to contact Bernadette Ballantyne about this, or any other story, please email