Engineering consultancies: getting back in on the act

By Fiona Czerniawska

Environmental consulting didn’t have a great recession.

Concerns about the impact on business of climate change and the need to use all resources, not just energy, on a more sustainable basis paled into insignificance faced with global economic meltdown. Organisations who’d prided themselves on their green credentials turned their attention to more immediate issues. Survival of the planet gave way to survive the week.

Environmental consulting dropped down the agenda as a consequence: money with consultants, where it was being spent, was going on cost-reduction. That wasn’t too much of a problem for most segments of the consulting industry: it was still a relatively small market, and was viewed by many firms as a long-term investment rather than a short-term bubble. So consultants, like their clients, simply went elsewhere. But for engineering consulting firms it was much more of a problem. For most of the previous decade, these firms had been looking for ways to expand out of the civil engineering space into something closer to traditional management consulting. Programme management was one route (a giant construction project is one of the best training grounds for complex programme management); property management and optimisation was another (buildings and their upkeep accounts for a significant proportion of a typical organisation’s costs, so using them more efficiently could save millions). But environmental consulting was a much more important part of the portfolio than it was for a conventional management consultancy – and for obvious reasons. Engineering firms could claim hands-on expertise in issues that management consultancies had only written about in their thought leadership. They could also claim two other advantages: consultants who were mostly trained engineers (clients praised their disciplined approach to problem solving) and a price point that was quite considerably lower than that of the other large firms, notably the Big Four (and clients liked this too). Neither, however, stood them in strong enough stead when clients, cutting back their consulting budgets, flocked to the brand safety of the biggest, most established consulting firms.

But are engineering firms about to make a comeback? Late last year Ramboll, a Copenhagen-based engineering firm, acquired ENVIRON, adding more than 1,500 environmental and health specialists to its existing portfolio and bumping it up into the ten largest environmental and health science specialists in the world. It was an interesting choice because ENVIRON had positioned itself very much as a consultancy: yes, it employed scientists and environmental engineers, but in aspiration they were more like a strategy firm. In buying ENVIRON, Ramboll actually bought two things. It strengthened its environmental business at a time when this is likely to start growing again, now that the global economy is recovering. It also bolstered its management consulting credentials at a time when the market might just be swinging back in its favour.

But the acquisition also suggests that the strategy of engineering firms will be different this time around. Learning the lesson of the last five years, they’ll know that engineering skills and a low-price point aren’t enough: sustainable success is going to depend on focusing on services which don’t become luxuries in a crisis. Environmental issues may well have a dramatic impact on our world, but they rarely have an immediate impact on business in the next week. ENVIRON didn’t position itself simply as an environmental consultancy: much of what it talked about was risk. And risk is a big word these days – “It’s like ‘open sesame’,” a partner in one of the Big Four firms recently told us. “If I turn up at a client and say I want to talk about risk, everyone, including the Board, is prepared to listen.”

Risk – an issue that’s getting broader and more visible all the time – could well be the engineering firms’ route back into the consulting market.