New York consulting engineers report on industry trends

This summer, the American Council of Engineering Companies of New York (ACEC New York) conducted a "state-of-the-business" survey among 93 consulting engineering firms across New York as part of its ongoing effort to identify trends and issues facing the industry. Key conclusions from the survey report include an increasing upward trend in acquisition activity as well as in the use of alternative delivery methods, such as design-build and public-private partnerships. Other factors broadly impacting the industry are cost competition and federal and state funding levels. In rating general industry conditions overall, more engineers described their business as fair (50.5%), and the same as last year (44%), than any other category of response. Only 7.5% rated their business "not good." Most of the engineers (61%) who participated in the 2011 survey were at least somewhat optimistic about the outlook for 2012. This represents an increase from a similar study conducted in 2009, which indicated a positive outlook among 46% of those surveyed. "Keeping a pulse on the industry allows us to better represent the interests of consulting engineers. While some issues are likely to remain at the forefront such as state and federal funding, qualifications-based selection (QBS), cost competition and attacks from public sector engineering unions, ACEC New York needs to monitor the constantly changing business environment so we can adapt our strategies and direction as needed," said ACEC New York president Jay Simson, CAE. Survey Highlights Among key findings from the 2011 survey: * More than one-third (36%) of survey respondents reported that their firm acquired another firm in the past five years. The acquired firms were primarily non-competing specialty firms (66%). This trend is expected to continue, with over one-half (51%) of respondents indicating that it is likely or very likely their firm will acquire another firm in the next five years. * Only 17% of respondents view consolidation favorably, with more than half of the participants saying it forces small and mid-size firms out of the market. * Nearly three-quarters (73%) of respondents said cost competition has had an effect on their business and 62 percent anticipate it will continue to impact business in the next year. * Nearly two-thirds (62%) of those surveyed said New York State funding levels have, and will continue to, impact their business; 37% said Federal funding levels have affected their business, and 50.5% anticipate their impact going forward. * The use of alternative project delivery systems is also expected to trend upward. Currently, 75% of respondents report that their firms have been involved in design-build projects and 27% have been involved in public-private partnerships. Most of those surveyed (75%) foresee the use of alternative delivery methods increasing over the next five years. * About half (48%) of all respondents have a positive view of both methods. An additional 29% were neutral on design-build and 39% were neutral on public-private partnerships. * Approximately half of the firms (49%) report working overseas, with only 10% conducting more than 25 percent of their work outside the U.S. Most respondents (61%) expect the amount of overseas work to remain unchanged. * Outsourcing to offshore consultants was reported by 21% of respondents, primarily limited to less than 5% of firms' total work. Seventy-nine percent of respondents do not anticipate a change in the amount of work offshored.