National survey paints clearest picture yet of CE industry

In October and November, 1998, member firms of ACEC participated in the first-ever national business survey of the Canadian consulting engineering industry. To ensure confidentiality, COMPAS Inc. was hired by ACEC to conduct the survey.

The aggregate results demonstrate the strength of our industry’s contribution to the Canadian economy. ACEC member firms account for nearly $5.2 billion in annual revenues and employ more than 41,000 people.

The survey also told us something about today’s business environment and how our members are responding. For instance, almost half of the ACEC firms surveyed (48%) expect to increase the size of their staff in 1999. When asked to identify the types of employees they expect to hire, the focus was squarely on professional (79%) and technical (74%) staff. However, 24% of member firms also identified skilled labour shortages as a potential stumbling block to economic growth. In fact, labour shortages were identified as the second biggest obstacle to growth after competitive bidding and pricing issues (33%).

As far as business activity was concerned, more than half (58%) reported increased revenues in 1998 over the same reporting period in 1997, while 22% reported decreased revenue and 20% reported no change. Regionally, Alberta firms were the most likely to report increased revenues (75%). British Columbia (38%) and Quebec companies (24%) were most likely to report decreased revenues.

Survey respondents, however, were relatively divided when asked to rate the general business climate for consulting engineers in Canada. While 42% rated it as very good (9%) or good (33%), more than one-third viewed it as average (36%) and a further 21% as very poor or poor. Executives of larger firms were more likely to view the general business climate as very good or good, while smaller firms were more likely to see it as very poor/poor.

In terms of work opportunities, private sector clients in Canada accounted for more than half (54%) of the revenues of ACEC companies. Public sector clients accounted for 38%, while international revenues (8%) accounted for the balance. Alberta firms were the most likely to rely on public sector clients in Canada (49% of total revenues), followed by Quebec companies (46%). Ontario firms were the most reliant on Canadian private sector business (58%). Firms in B.C. were the most focused on the international arena, either with private sector (11%) or public sector clients (4%).

When asked to identify their main source of competition, a large majority (77%) pointed to other consulting engineers. Heading the list of other competitors were contractors, while a few executives pointed to environmental consultants, architects or public sector players. Contractors were more likely to be mentioned by smaller firms (e.g. 13 % of firms with 10 employees or fewer), as were public sector players (4% of the smallest firms). Larger firms focused most often on other consulting engineers (e.g. 93% of firms with more than 50 employees).

In terms of the manner in which business is undertaken, traditional contracts account for 85% (mean score) of total revenues of ACEC companies. Design-build contracts account for 12% of revenues, while BOT (build-operate-transfer) (2%) and BOOT (build-own-operate-transfer) (1%) account for very little in terms of overall revenue. It is also worth noting that 38% of firms have all of their revenue come from traditional contracts. For design-build, only 8% of firms have half or more of their revenue from this contract type.

The average revenue generated per employee in ACEC firms that completed the survey was $81,564 (i.e. total revenue divided by the number of employees in the firm). The survey reported that the revenue generated per employee in a smaller firm (1-10 employees) is higher ($85,249) than for larger firms (over 50 employees) which had a per employee rate of $77,031.

By a wide margin, the Building and Construction sector was identified with the greatest frequency (59%) as one of the top sectors in terms of revenue generation. Almost twice as many executives identified this sector compared to any other. Executives were asked to identify the three sectors that accounted for the largest share of business conducted by their firm during the past 12 months. Four sectors were identified by between one-quarter and one-third of participating firms: Waste/Waste Water (31%), Environmental Services (31%), Transportation (29%) and Industrial and Manufacturing (26%).

Design and studies work was identified by 89% of executives as one of the three areas of service in which their firms conducted the largest share of their business. Almost half (48%) said the same about Construction work, while Project and Operations Management was cited by 40% and environmental services by 23%.

COMPAS is a prominent national survey firm. This is the first attempt ever to obtain industry business data from member firms at a national level. More than 58% of member firms participated in the survey and 68% of the respondents were either the president or CEO of the member firm. Results can be considered to be accurate +/- 3.6%, 19 times out of 20.

For further information on the survey results and on how you can obtain a copy of the final report, contact the ACEC National Office.

ACEC member-organizations: Association des ingnieurs-conseils du Qubec, Consulting Engineers of Ontario, Nova Scotia Consulting Engineers Association, Consulting Engineers of British Columbia, Association of Consulting Engineers of Saskatchewan, Consulting Engineers of Alberta, Association of Consulting Engineers of Manitoba, Consulting Engineers of New Brunswick, Consulting Engineers of Yukon, Consulting Engineers of the Northwest Territories, Consulting Engineers of Newfoundland