Goodbye mid-sized firms?

TEXT SIZE

Frank Stasiowski of PSMJ Resources is predicting that medium sized engineering consulting firms will disappear in the next 10 years.
The U.S. management consultant who specializes in the architecture, engineering and construction sectors, makes the prediction in a new book, Impact 2020: 10 Giant Forces Now Colliding to Shake How We Practice Design in 2020.
Stasiowski predicts that the large firms will either swallow up the medium sized firms (those with 25 to 200 people), or the medium-sized firms will simply have to shut their doors.
A promotional blurb for the book outlines the factors Stasiowski says are going against the survival of mid-sized firms.
Clients, he says, are attracted tolarge firms "because of [the large firm's] breadth of expertise ... their geographic scope, and their abilities to offer efficiencies of scale."
The small firms, on the other hand, i.e. those with 25 employees or fewer, also have traits that help them to survive: "Small firms can have a competitive advantage by competing on price, since they have lower overhead costs," says Stasiowski. Small firms, "may also tout their ability to offer specialized knowledge, faster speed of service, personalized customer service, and the direct involvement of principals in all phases of projects. It's more difficult for medium-sized firms to make those kinds of value propositions to potential clients."
Stasiowski predicts that there will be more mergers, resulting in larger firms getting larger, but also the spawning of thousands of tiny firms "as professionals who lose their jobs in the wake of mergers start their own firms."
See www.psmj.com

Reader Comments

Most recent firstOldest first

Tonny Johansen, P.Eng.

Although there is a consolidation in the industry at this time. I suspect the trend is cyclic. The multitude of tiny firms will find, in time, that there are advantages to grow a little larger (the size may depend on the market area and the nature of the work - e.g. structural versus civil). In time, these small firms will group together to service larger geographic areas and there will emerge another generation of mid-sized firms. In my experience, the large firms do not want to locate in the smaller market areas, but instead, services these areas from consolidated offices suiting their scale of operations. The next generation of mid-sized firms will likely originate from the amalgamation of small independant operations with principals located in the smaller communities but tied to an organization that can facilitate worksharing and client coordintation across a larger geogrphic area. The local presence will be important for client development and senior involvement in the work.

Posted July 27, 2010 11:36 AM

Albert Schepers

The one problem with large firms is they operate based on risk management and, particularly in structural design, the larger companies push the design of components onto the contractors; spread out the liability. In some cases this is warranted but in others large firms tend to not do engineering so much as project management. This does open up the business for the small firm where one engineer can service several small contractors or it will spell the demise of the larger engineering firms in favour of design build firms. As large firms back away from engineering design and the inherent risks and pass them on to others their clients will start to look to design build companies for their complete solutions.

Posted July 27, 2010 10:29 AM

First Prev Next Last

Post A Comment

Disclaimer
Note: By submitting your comments you acknowledge that Canadian Consulting Engineer has the right to reproduce, broadcast and publicize those comments or any part thereof in any manner whatsoever. Please note that due to the volume of e-mails we receive, not all comments will be published and those that are published will not be edited. However, all will be carefully read, considered and appreciated.

Your Name (this will appear with your post) *

Email Address (will not be published) *

Comments *

* mandatory fields

Current IssueMagazine

Canadian Consulting Engineer is a publication for engineers in construction. It covers building structural, mechanical and electrical systems, transportation infrastructure, water and wastewater infrastructure, and environmental issues.