Consultants become more selective over clients as workload ramps up

Clients that have squeezed consultants to reduce fees, drop margins and accept challenging payment terms may find it difficult to secure resources as the market improves, firms said this month. 

Bernadette Ballantyne
12 August 2014

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“We only want to work for clients that value the value what we bring,” says Steve Wooler, managing director of BWB consulting. “It sounds simple but many of the clients we have worked for just want to extract the maximum service for the smallest fee or sometimes not even pay at all.”

"What I find extraordinary is how long it takes the pendulum to swing for people to realize that we should be charging more.”

Wooler was speaking at a round table in London earlier this month to discuss emerging trends and challenges in architecture and engineering based on a new report from ERP software specialist Deltek.  

The report highlights increased optimism with 72% of firms expecting growth in 2014.

“There is a massive amount of work out there and we are underselling our services,” says Michael Coombs, senior partner at Alan Baxter & Associates. “During the recession fees were too low, so to maintain quality we all did more than we were paid to do. What I find extraordinary is how long it takes the pendulum to swing for people to realize that we should be charging more.”

Clients will notice however when firms start to turn down work. “We have just done a labour plan to 2033,” says Paul Jackson, sector director for infrastructure at NG Bailey, which is a tier 2 contractor specialising in mechanical and electrical engineering services. “Considering the growing work in rail and new nuclear we have found that we will have to be more selective.”

As the pendulum swings firms that have been most reluctant to pay for consultants’ services will find it more difficult to resource their projects. “Some of the major contractors of this world are absolutely the worst payers that we have worked with,” points out David Dryden, chairman of the multi-disciplinary consultant Cundall highlighting one UK based tier 1 contractor in particular. 

Recruitment: “You probably have to recruit at double the rate that you think that you would to cover the bleed of people going away”

“We are avoiding being on projects - not only by declining to work for them but also by asking not to have them on tender lists if necessary. We won’t work with them at all. Seriously why should we? They should now feel the effects of their behavior in the past.”

The competitive recruitment market is also putting pressure on fees with firms needing to raise salaries to both attract and retain engineers and other professionals. This is made even more challenging as the industry emerges from the recession which saw salaries suppressed.

“You probably have to recruit at double the rate that you think that you would to cover the bleed of people going away,” said Mark Ingram, managing director of consultant GHA Livigunn. “You absolutely have to pay market rate otherwise you are at great risk of losing people and will end up paying agency fees, and losing time in management and disruption.”

Other firms report the problem of staff being poached by client bodies who are paying up to £20,000 per year more – a figure which firms say they can’t compete with even if they over promote their engineers.

Against this backdrop then consultants are under pressure to raise fees and work with clients that value their services and pay them promptly. Organisations that have developed reputations as poor payers during the recession could finally feel the effects of their poor working practices as firms seek to build long term relationships with sophisticated clients.

You can read the full text from the Deltek round table in the Features section of the  July/August issue of Infrastructure Intelligence magazine available here in the tablet and PDF versions http://tablet.infrastructure-intelligence.com/

Read the  Deltek report here