Leaders of the Pack

Engineers and E/A firms posted healthy gains last year, well ahead of what architects and contractors did

July 01, 2003 |

Engineers and engineer/architects as a group fared better than other Building Team disciplines last year, according to Building Design & Construction's 2003 survey of the top 300 firms.

While billings of architect/engineer firms fell an average 11.8%, average revenues of engineering firms increased by almost 30%, with billings of $50.4 million. Revenues of the average E/A firm climbed 44%, to $72.2 million in billings.

The gains were not universal, however. In each category, the number of firms reporting increases was about the same as the number that recorded declines. For firms that posted significant increases, the common theme was a reliance on government work or healthcare projects.

At Albuquerque-based mechanical engineer Bridgers & Paxton Consulting Engineers, last year's billings increase was attributable to strong demand from healthcare and U.S. Department of Energy clients, according to EVP John Grapsas. The firm performs extensive work at DOE's Sandia and Los Alamos laboratories.

"We've had steady growth over the last eight to 10 years and haven't lost any significant clients," says Grapsas. He says a fair amount of schoolwork is available, and that the market for detention facilities in New Mexico has gone "gangbusters," with about a dozen active projects, primarily county jails.

Office markets served by Bridgers & Paxton's Albuquerque and Phoenix markets have been dormant. Albuquerque's office market doesn't fluctuate a lot, he says.

Grapsas says the industry's slowdown has produced at least one unexpected benefit: "Our inability to hire particularly qualified people limited the amount of work we were able to produce. Now we're able to keep up with the increased work we've found."

Healthcare projects put food on the table for M/E engineer KJWW Engineering Consultants, Rock Island, Ill. These included a $110 million expansion and renovation of St. Elizabeth's Medical Center in Lincoln, Neb., and engineering for a new $100 million science/classroom building at Harper College in Palatine, Ill., in addition to several Chicago-area school projects.

KJWW also has done considerable work on commercial projects in the past two years, notably a $137 million new headquarters for Allied Insurance in Des Moines and an $80 million building for Wells Fargo Home Mortgage in West Des Moines. The firm recently opened a St. Louis office, now staffed with six engineers, who are working for the most part on four hospitals.

A recently signed contract to design another Wells Fargo building has been held up. "Everything has slowed down more this year," says marketing manager Melissa Oelke. "A team gets selected, then the project gets put on hold because the owner hasn't decided to release funding."

At Kansas City-based mechanical/ electrical engineer Clark Richardson & Biskup Consulting Engineers, billings were up 17% last year on the strength of biotechnology projects. These included a 450,000-sq.-ft. manufacturing facility for IDEC Pharmaceuticals in Oceanside, Calif., and a 230,000-sq.-ft. biotech manufacturing facility in Rhode Island. Marketing director Sue Dreckman attributes the firm's success in the biotech market to its in-house mechanical/electrical expertise.

Clark Richardson & Biskup has leveraged its biotech/pharmaceutical experience to gain entrée to jobs involving university research facilities, such as a 240,000-sq.-ft. life science facility at the University of Missouri and a research laboratory at Kansas State University.

New York City-based structural engineer Weidlinger Associates' experience in the field of protective design has helped to bolster its revenues since 9/11, according to principal Hamid Adib. The firm participated in the preparation of State Department design guidelines for foreign embassies, and also has been heavily involved in the investigation of the World Trade Center collapse.

Adib says that increased concern about security by the public sector is extending to private clients.

Weidlinger is working on a number of U.S. General Services Administration projects, primarily courthouses. And although foreign projects represent less than 15% of firm's billings, the firm is finding strong markets in Korea and China.

Jon Magnusson, CEO of Seattle-based structural engineer Magnusson Klemencic (formerly Skilling Magnusson Ward Barkshire), says the commercial market evaporated even before 9/11.

"As the market contracted, it became more focused on specialist players — niche firms," he says. "We work hard to have multiple niches. I think that's why [the slowdown] hasn't hurt us as much as firms that aren't as specialized in certain areas."

Magnusson's firm is currently working on a $485 million convention center in Phoenix, for which the conceptual design phase was recently completed, as well as the new Seattle main library, now under construction.

The firm's resilience owes much to its ability to win large projects that carry over from year to year — for example, Magnusson expects the firm to be actively engaged on the Phoenix convention center for at least four years.

Magnusson Klemencic has a number of projects in the Chicago area, where it recently opened a client service office. "We really haven't had any downturn for several years," he adds. "We're actually in a hiring mode."

About 75% of Aurora, Colo.-based structural/mechanical/electrical engineer Merrick & Co.'s work is for the Federal government, for example, an Agricultural Research Service laboratory in Ames, Iowa.

Revenue was up "a couple of points" last year, says business development manager Robert Trout. The company's performance in the preceding year was impacted less by the market than by a single project that lost money. "From the customer's perspective, it was a fine job; but from our perspective, it wasn't," he deadpans.

The firm ended 2002 with its biggest backlog ever. Halfway through the year, Merrick appears on target for a successful 2003, Trout says.

Los Angeles-based E/A DMJM+H's exposure to a slowing economy has been cushioned by its significant amount of Federal work and its ability to offer a wide range of services, according to corporate communications director Danette Riddle.

Nevertheless, the firm continues to seek other types of work. "If you market only to what you already have, you're probably missing some opportunities," she says. "Markets are cyclical, and you always have to think about what's down the road."

That's advice every firm in the building design and construction field should heed.

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