Our annual "Giants" report on the 300 biggies in design, engineering, and construction (with a special feature on building owners) presents a mixed picture for 2002.
Overall, it was a fairly decent year, despite the post-9/11 impact and the run-up to the war in Iraq. The 300 Giants in our study gained 16.4% in commercial, industrial, and institutional project revenue, from $102.6 billion in 2001 to $119.4 billion last year. Not bad, considering the circumstances.
A/E firms had the roughest sledding, sliding to $2.48 billion in billings, from $2.65 billion in 2001, a 6.4% drop. Ooooh, that hurts! Design firms barely held their own at $1.52 billion in billings in 2002 (vs. $1.59 in 2001), but as our detailed analysis shows, some of the big architecture firms took sizable hits.
Engineers fared nicely, thank you, up 29.9%, from $1.94 billion in 2001, to $2.52 billion last year, while E/A firms climbed 44.4%, to $3.61 billion in 2002 compared to $2.50 billion in 2001.
Contractors? Not too shabby: $74.2 billion last year, up 12.1% from $66.2 billion in 2001. Construction managers also raised high the flag of prosperity, hitting $35.1 billion last year, from $27.7 billion in 2001 — a nearly stratospheric 26.7% boost. Take a bow, CMs!
In contrast to our survey results, which showed a nearly 12% drop for the top 50 A/E firms, a sample of 23 A/E and consulting firms meeting in New York in June reported a 3.8% gain for 2002, and that doesn't even count another percentage point gain if you throw in acquisitions. But Paul Zofnass, president of the Architect/Engineer Financial Consulting Group, noted that the 3.8% figure covered a range from -25% to +33%.
As for this year and next, Craig Martin, president of Jacobs Engineering, warned his A/E colleagues about an "offshore trend," meaning both increased demand for A/E services from outside the U.S., as well as the growing capability of firms beyond these shores to deliver A/E services at a deep discount to their American counterparts.
Harold Adams, chairman emeritus of RTKL, echoed those remarks with regard to China, where many U.S.-trained A/E nationals are heating up the competition against American firms.
Given overall economic conditions, however, including a flat inflation rate, performance in 2002 wasn't all that bad, and it could hardly get much worse.
Or could it?