The MRUK Best of the Professions

27 Jan 2006

The MRUK Best of the Professions survey was carried out for Prospect in December 2005. The research company talked to almost 100 partners and directors from leading practices about the performance of other members of the design team. When Prospect talked to the winners, it found that the rising cost of contracts was a growing concern among many consultants.

Talking to the winner of this year’s MRUK survey provides some important food for thought. On the positive side, the construction sector is buoyant, contractors are training new recruits, making reasonable margins and are in a position to pick and choose when to tender. Most architects and other consultants report that they are inundated with work, although some have become increasingly dependent on large public-sector contracts, particularly in the education sector, and plan to shift resources to follow the next wave of public investment.

The main issues raised by many of the contenders in this year’s polls were the rising prices of contracts and the skills shortages across the industry as a whole. Architects and cost consultants have expressed concern that it is becoming increasingly difficult to get reasonable tenders for projects except those simple initiatives that can be guaranteed to give a good return. In response, contractors’ representatives argue that their profit margins are still very narrow, but at the same time they are being ask to absorb the long-term costs associated with risk. In the contemporary claims culture, clients are keen to offload all of the liability for problems on to the shoulders of the contractor.

On the question of skills, most consultants are struggling to attract experienced staff. The shortage of consultants in their thirties and forties is a product of the late Eighties’ recession, when a lot of newly qualified architects, surveyors and engineers left the industry. The construction sector and its training schemes are also affected by the ups and downs of the market. However, according to Scottish Building, the contractors’ employers federation, apprenticeships in the industry in Scotland are very healthy.

The survey suggests that the rise of the engineers continues. A decade ago architects always complained that they couldn’t find a decent structural engineer in Scotland. Now, highly talented engineering practices such as Arup, Buro Happold and SKM Anthony Hunts are making their mark on the industry. For engineers, ‘multidisciplinary’ is the buzzword; many now offer a package of skills from civil to structural, services and acoustics. This makes them very attractive to clients that are keen to limit risk. A similar point could be made about cost consultants; they too are becoming multi-skilled, filling the gaps left by the demise of institutional estate departments as cost consultants, project managers and facilities managers.

Design and Build has already educated the architectural profession and other consultants in the discipline of keeping things simple as a way to guarantee control of the detailing. The result could be more simple, sensible buildings and a culture in which there is little space for the imaginative exploration of ideas, or some might say indulgence. The balance of forces within the industry will no doubt generate some innovative solutions, but there is an increasingly narrow space for creativity.


Engineers
2005 was a year that was notable for ground breaking collaborations between architects and engineers. The Stirling Prize and the Andrew Doolan Prize were the icing on the cake for the unprecedented relationship between EMBT/RMJM and Arup on the Scottish Parliament. Whatever you think of the building itself, the singular capacity of the engineers to deliver the demanding requests of the design team, such as the extraordinary cantilever above the front entrance has to be admired. While Arup’s involvement on the Parliament was special, given the complexity of the design and what we will politely describe as an evolving brief, similar collaborations will be ongoing throughout 2006.

The company itself has again been voted the best structural engineering firm by architects. Working with Allan Murray as well as RHWL, specialist hotel architects based in London, Arup is currently working out the large number of complexities on the £200 million Carlton project on the east side of Waverley station. As well as interfacing with Network Rail and the World Heritage Site of the Royal Mile, the project takes place on the site of the first gas works in Edinburgh. According to Willie Crowe, director of Arup Scotland, the first part of the major contract is to decontaminate the area using bio-remediation, which employs bacteria to eat up hydrocarbons.

“It has taken six months here. There are also massive wells to be dealt with, as there was at Holyrood. This was also a site for breweries, which had a demand for water. Allan Murray’s scheme will create a square, which makes a lot of sense. People criticise the Parliament but it’s opened up the whole area. This scheme will help with communication with the Parliament from the station.” Together with the Quartermile project and the Arena on the Clyde, both with longtime collaborator Sir Norman Foster, the Scottish division of the company has filled the void created by the Parliament’s completion.
One other discernible trend this year is how important the Clyde is to the best firms.

Arup are working on the BBC building, opposite the Armadillo, one of their old jobs. They are also working on the National Arena - again with Fosters - who seems eternally grateful for the job the structural engineers did to take the wobble out of the Millennium Bridge. Buro Happold, meanwhile has developed a close relationship with Zaha Hadid on the Riverside Museum in Glasgow. “Of course, the simple form of the building means that structurally the building is not overly complicated, although there is a big challenge to meet the aspiration for the roof. However, in terms of services there are a far greater number of challenges due to the building’s position,” says Mark Barrie, services associate of Buro Happold.

Both firms still express the philosophies which they were founded upon; a feature which clients find attractive. Arup was founded in 1946 by the Dane Ove Arup, along principles of total design wherein the design and construction processes are more integrated, the professions are more interdependent and technology is applied in balance with economic and social issues. Buro Happold was founded in 1976. The firm was, from the first, devoted to exploring new technology and, in association with architect Frei Otto, it started to work on lightweight structures. Reputation was initially built on tension: fabrics, cables, shells and lattices.

Although Hadid is clearly taking advantage of this tradition for her wavy roof, Buro Happold has also developed a reputation for multi-disciplinary work. It is providing joint discipline work on a sport village in Fife and the new Edinburgh University Informatics building at Potterrow. Buro Happold, which was voted best in the service engineers division and second best in the structural engineers section, is still busy working on Hadid’s Riverside Museum. On the side of the River Mersey it is working with the Danish architecture practice 3XN on the Museum of Liverpool, or the ‘Fourth Grace’ as it has become known. The period of reorganisation that the company went through in 2004 has apparently paid off.

Nor was Buro Happold alone in benefiting from some strategic realignment in order to provide what its clients are looking for. 2005 was the first full year of trading for SKM Anthony Hunts. The purpose behind the merger was to enhance the range and level of the services it could provide in the UK. Next year will see the completion of the company’s three-year integration programme. It is a process that SKM director Shahram Hemmati says is going well. “Integration takes time but every project allows us to integrate better. We want to offer a seamlessly integrated service of various disciplines, such as building services and security engineering, building services design, façade engineering etc. The rest of the global practice is there and the UK ones are coming into line with international standards. We are now strengthening our UK practices. What our clients are saying to us is very positive,” he says.

Hemmati sees a buoyant market in general stretching on into 2006 and early 2007. In Scotland the firm has just finished Gogarburn (see p12-19). SKM, however, is particularly looking forward to announcements regarding the Olympics in 2012 and the Commonwealth Games in 2014. “We have expertise on long-span roofs which are important for the sports market. Only a handful of firms in the market have this,” he says. The firm is part of the consortium for the Wembley Stadium project, which is looking less and less likely to be finished in time for the FA Cup this year. “Although we’ll see the PFI education contracts coming to an end next year, there is still a good deal of scope for work in the health sector,” he says.

This is borne out by the experience of Hulley and Kirkwood which, as the largest mechanical and electrical engineering practice in Scotland, had the second largest number of recommendations in the services engineering category. Its large PPP project for East Lothian Schools was finally finished in 2005. The refurbishment and extension of Dunbar Grammar, Knox Academy, Musselburgh Grammar, North Berwick High, Preston Lodge High and Ross High secondary schools, as well as the provision of a swimming pool at Prestonpans and a community learning centre in Musselburgh, provided a huge slice of work for them. Its work on Ayrshire & Arran Acute Hospital NHS Trust will continue through 2006 however, and work as mechanical and electrical engineers on the Kelvingrove Museum refurbishment will give it a high degree of prestige.

McLay Collier has been recommended highly this year in the structural engineers category. It has also benefited, along with a workload of housing and general industrial projects, from a degree of specialisation. The company has so far cornered the market for printing presses in Scotland, including joint discipline work for the Daily Record at Cardonald, and the Herald, at Cambuslang. It is currently doing work for the redevelopment of a Johnston Press facility in Portsmouth. The project entails demolishing part of the existing structure and building a new, enlarged, 3245 sq m facility to contain the new press hall. As the printing industry goes through a period of upheaval, partner Andrew Allan sees McLay Collier in “a strong position”. “It’s not a shrinking market,” he says.

In the services engineer category, KJ Tait, which was the most frequently recommended agency last year, was rated highly this year as well. The success with which the company has previously organised services for specialist laboratories for biotechnology has been taken up by this cherished industry. “We are involved in the engineering services design of four biotech laboratory research projects on Cambridge Science Park. We’re also doing work for Edinburgh Technopole, which is adjacent to the Roslyn Institute,” says Stephen Osborne, partner.


Surveyors
In the cost consultant category the winners of this year’s poll were Thomas and Adamson and Doig and Smith. Thomas and Adamson is the quantity surveyor on Edinburgh’s Quartermile project’s, acting for joint venture client Gladedale Capital Projects. The demolition work on the Quartermile has now been completed and work has begun on the foundations. The project is worth £200 million and is one of the largest live projects in Scotland. “Due to shifts in the market the project has changed slightly, to provide a greater mix of accommodation. It is mainly residential, but includes office space, retail and a hotel,” explains Martin Reid, senior partner at Thomas and Adamson. The practice is also QS on the extension to the EICC with CALA/AWG and Terry Farrell and Partners. They tend to work with big commercial clients; they have a national role with Tesco. The biggest project on their books at present is the redevelopment of Union Square in Aberdeen, a £50 million retail and leisure project which is currently out to tender.

When asked about changes in the market over the past year and his forecasts for next year, Reid says that the trend is definitely towards investment partnerships and projects that are mixed use in character. “On the larger projects, rather than put all of their eggs in one basket developers prefer to spread the financial risk; it can provide a continuity of work,” he says.

“In the market more generally there is a lot of work around. Even the retail market, which is very difficult, is ongoing, and the commercial market is coming back – there is an under-supply of the right kind of commercial space. In the public sector everyone is looking to health,” explains Reid. The practice has not pitched for PPP work in the past but Reid now feels that it is time to redress the balance.

Doig and Smith was responsible for the entire cost management of the £350 million RBS’s HQ at Gogarburn. It is working on a framework with BAA, one of only three cost consultants, looking at Glasgow and Edinburgh airports. It is also working on Telford College in Granton with HOK Architects – the £42 million project is due for completion in spring 2006 – and working with the University of Durham on a long-term framework for the care and development of its estate. “There is a trend towards framework arrangements, so that clients can develop an ongoing relationship with consultants. It means they can avoid a situation where they are constantly re-inventing the wheel,” says Stewart Cobb, a partner at Doig and Smith. The practice is looking at health and education projects, but the bulk of its work involves high-quality residential projects for developers such as Elphinstone or BL Ltd.

As we identified in previous years, the role of the traditional quantity surveyor is shifting. While most practices would prefer to be called cost consultants, measuring costs and preparing bills of quantities is only a portion of their current work. acting as technical adviser for clients and project management represents a growing proportion of QS practices’ work.

According to Reid the big issue facing the industry in 2006 is price inflation. He admits that on some contracts clients are finding it increasingly difficult to get contractors to price for the jobs. “Even projects that you might consider very attractive are not attracting contractors that want to tender. When you have a list, people withdraw in the tendering process,” he says. “There has been a problem with prices. There has been an increase in the price of steel and a knock-on effect from oil prices, but those increases are levelling out.” Reid believes some of the price rises are coming from within the industry itself.

In response to this, contractors argue that staff costs are rising, and a shortage of high-quality, skilled individuals is leading to wage inflation. The Hays Salary Survey seems to confirm this point. Even with Thomas and Adamson’s reputation the practice has a problem recruiting new surveyors. “Although the universities are now full of surveying students and the public profile of the profession is improving, in the 1990’s recession a lot of surveyors left the industry. As a result, the sector is now finding it hard to attract experienced surveyors in their mid-thirties,” says Reid. “I think all consultants are short-staffed; the demand to produce information is putting architects and surveyors under pressure. Most organisations that I know are very busy,” he added.

For the third year running, DM Hall topped the poll for land and property surveyors. DM Hall is one of the biggest players in Scotland with 30 local offices.



Contractors
Contractors argue that they are having to carry all of the burden of risk on projects. Bovis came top of the poll for management contractors for the second time this year, which may be a legacy from the Holyrood project, but could also relate to its role on the new BBC HQ at Pacific Quay that is six months off completion. Although Bovis features as the leading management contractor in the poll, much of its new work this year, including the BBC, has been Design and Build. Last year it picked up a new contract for Pollok Town Centre, an £80 million scheme to rebuild the retail and public buildings for the run-down suburb for Retail Property Holdings, and is currently negotiating a £30 million extension on that contract. It has also just handed off the first of ten schools as part of the South Lanarkshire framework agreement that has been procured under a PPC2000 contract.

Gordon Anderson, regional operations director at Bovis, said: “In the next five years I see two-stage Design and Build, in which consultants are novated to ourselves, as the main form of procurement.” Management contracting is not a favoured procurement route because it leaves the client in a vulnerable position. Anderson, like many contractors, is keen to stress that it is increasingly the case that developers and clients are keen to offload the risk at the earliest opportunity.

In response to the suggestion that contractors were pricing tenders too high, Anderson said: “It is still a very competitive market, albeit buoyant. I think we are competitive particularly when you consider the contractual obligation and risk that is being transferred to contractors.” Lend Lease Projects, part of the Bovis Group, has been established to provide project management services for clients.

‘Buoyant’ is the word that most contractors would use to describe the current state of the construction industry, but there is also a strong sense that contractors are not in a very good position to make any overly optimistic statements about what is likely to happen over the next few years. According to a Construction Products Association (CPA) report released recently, after 11 years of continuous growth, the largest such period since the 1950s, construction output fell by 1.3 per cent in 2005. Michael Amkers, chief executive of the CPA, explained the drop, saying: \"In 2005 the construction industry was hit by higher energy and raw material costs, weaker private-sector activity and a fall of around 3 per cent in government investment in the built environment.” Despite last year’s decline, the CPA is predicting a 1 per cent pick-up in overall output in 2006, expected to be driven largely by government investment. Output forecasts for 2007 and 2008 predict an average increase of around 3 per cent, as economic growth in the UK lifts private-sector activity and the government delivers on plans made during the current spending review. The CPA figures show that in 2005 there was a 1.8 per cent increase in new housing (£12.9bn) while public non-housing expenditure was down by 7.2 per cent (£7.5bn), infrastructure was down by 10.3 per cent, and industrial and commercial remained static at £12.7bn. Total UK expenditure on construction was £79.2bn. The forecast for 2006 is for a small rise in investment in housing and public buildings and a 5.5 per cent rise in infrastructure.

Michael Levack, chief executive of Scottish Building, the contractors’ employers’ federation, is keen to stress that the discussion about a skills shortage in the industry is in danger of being over-egged. While he insists that contractors are not complacent about apprenticeships. Over 2,300 building craft apprentices were registered in Scotland during 2004 and the final number is expected to be exceeded this year. Scottish Building is lobbying for government support for training.

While Levack understands the concerns over costs he insists that contractors are not raking in the profits as a result of the current demand. “If you look at the marketplace, tender prices are going up and contractors can pick and choose which contracts they tender for. If there are five contractors pitching for a job and you know that the cheapest price will win, you have to assess whether tendering will be a waste of time and effort.” He rejects claims made in the Highland press at the end of 2005 that the market in the area was overheated. “Tender prices are up, but contractors’ margins are increasing. Most contractors go and crack open a bottle of champagne if a job is completed with a 2 or 3 per cent operating profit. On top of that they have to deal with risk and long-term liabilities.”
Alistair Wylie, the chair of the CIOB in Glasgow and managing director at Campbell Construction (CCG), was named as one of the most impressive players in the industry. CCG’s turnover to year-end March 2006 is projected to outturn at £100m. CCG directly employs 423 operative across key trades and 79 apprentices. Ian Mathers of Torith, who also appears in the poll of individuals, argues that contractors’ decision to tender for jobs is determined by a risk and opportunity assessment. He believes that good information from a competent design team is a crucial factor in deciding whether a contractor will tender. “We do not expect projects to be easy but working with the right quality of people (clients and professionals) with an honest and positive attitude to the management of risk, gives everyone the best opportunity for mutual success and satisfaction. We need to avoid incompetent people who seek to inappropriately transfer the risk without the necessary level of resource to deal with the problem. This is the lifeblood of a project and measurement of this factor is similar to taking the temperature of a job.” Like Anderson, Mathers believes that the way forward for the industry is for clients and professionals to take a two-stage partnering approach.



Landscape
Gross Max and Ian White top the landscape architects polls.
Two very different practices with very different client bases head our list of landscape architects. The first is again Gross Max, which topped the list of recommended practices last year. In that time it has completed the landscaping work for the Stirling-nominated BMW Factory in Leipzig, Germany. This year it will also complete work on the landscaping for the Maggie’s Centre in Kirkcaldy by the Pritzker Prize winner, as well as the master plan for the Zorrozaurre Peninsula in Bilbao. Zorrozaurre is a post-industrial wasteland at the heart of Spain\'s third biggest city, 15 minutes\' walk from the Guggenheim Museum.

It is one of the rare notes of continuity in a wide-ranging number of projects the practice is involved in over the coming year. The Zorrozaurre project is a step towards one of the practice’s ambitions to do more urban design. “We don’t consciously divide urban from rural or park work, but we want to explore the harder areas a little more,” says Bridget Baines who, along with Eelco Hooftman, founded the practice in 1996. Work around Landsdowne Road Stadium and Wakefield should give them ample opportunity to do so.

Another ambition for the practice is to work more in Scotland. Projects such as its work at the West Entrance of Edinburgh’s Botanical Gardens are rare; the practice more commonly works further afield, with two schemes by the Thames – one at Tower Bridge, the other at Royal Festival Hall – and another at the gardens of Murphy’s High Commission in Sri Lanka.

It is a feature that strongly contrasts with Stirling’s Ian White Associates, which follows the exotic flower of Gross Max with a workload that has a far more domestic focus. IWA will continue into its third decade of work with Edinburgh Park. IWA, established 32 years ago, has also had a 15-year-long relationship with Stirling University. Both long-term working relationships are typical of the kind of work IWA has a reputation for. Lancaster University and Sheffield University have both sought out its services for landscaping work in recent times. In terms of more rural locations, it will this year continue its working relationship with Page and Park, which first began on the Lomond Shores and has been continued for the Lomond and Trossachs National Park visitor’s centre. It will also be doing work on entry points into the Cairngorms.




Lawyers
As with other professions in the construction industry, the PFI/PPP has proved to be an important market for lawyers. However, for the legal profession it is doubly if not triply important. Those creating a tender for a PFI/PPP contract need legal representation as much as those who are tendering for it. Last year, Macroberts acted for the successful bidders for schools in Argyll and Bute and East Renfrewshire. This year it is working up the bid for Highland Council for schools. In addition, lenders require representation. Macroberts is currently acting for bankers in a scheme in Forfar.

Lawyers, however, are no different from the rest of the industry in certain respects. As the number of contracts on offer in the education sector declines in Scotland, so they are increasing in the health sector. Macroberts, however, is the most highly recommended firm in the legal section. According to David Henderson, partner of the construction group, the firm at large considers itself well-placed because of its diversity. “We have a lot of support work in tax issues, corporate tax and expertise in planning and environmental law. These areas are becoming of increasing importance, as is the ever-growing complexity of employment law,” he says.

Despite the growing interdependence of legal disciplines, size still definitely counts for something. McGrigors, which came second in our list, is a bigger beast altogether. With offices in Belfast and London, McGrigors is the only law firm in Scotland able to practise in all three UK jurisdictions. It also has a total staff of 527. In 2005, McGrigors showed its might in the PPP sector by winning more infrastructure and health deals in western Europe than any other firm.
Yet smaller companies are preventing the companies that are large or that have dominated traditionally from having the field to themselves. Keith Bishop, head of the construction and projects group at Anderson Strathern, which came in just after McGrigors, believes that his firm rates highly because its pricing level is more acceptable compared with the premium rates of more established firms. “We are a pretty strong construction firm and our pricing levels are more palatable to many. Contractors are facing tighter margins today and the days of ‘how much can we charge for this?’ have gone. Although we can’t deal with big jobs such as PPP, on both contentious and non-contentious list jobs, we are providing competition,” he says.