Has fee competition undermined consultancy's reputation?

How easy is it for consultants to be innovative under current procurement regimes? Infrastructure Intelligence asked Mott MacDonald chairman Keith Howells and URS boss John Horgan: Has fee competition and a focus on man hours turned consultancy into a commodity and undermined its professional reputation?

Clients are demanding quantum leaps in the amount of infrastructure that needs to be built but are unsure how to extract the necessary innovation from their consultants to keep costs down.

Meanwhile the profession is locked into being paid per hour, often on a basis of lowest, or close to lowest price wins, a system not guaranteed to encourage innovation.

The end result is a general moan, that you must all have heard, about consultants being only interested in maximising hours and not in coming up with game changing ideas.  

Is that fair? Infrastructure Intelligence asked two leading consultancy bosses: Has fee competition and a focus on man hours turned consultancy into a commodity and undermined its professional reputation?

Keith Howells, chairman Mott MacDonald

“The answer to this question is far from clear cut.

On the one hand, over the last 30 years, fee competition has definitely improved the efficiency of the industry by forcing it to be more customer focused and better managed, and to adopt new technologies to deliver greater productivity. There is clearly room to further improvement, by customers’ being clear and unambiguous about scope of work and by facilitating more effective customer and stakeholder engagement. New technologies, such as BIM, will also support greater efficiency in the broader project context.

On the other hand, while customers may believe they have benefited in terms of lower fees, they have not always given their consultants sufficient time or money to find optimal solutions, potentially resulting in higher construction and operational costs downstream.

Fee competition has also created pressure on salary levels and investment in training with the result that the industry has found it harder to attract and retain the best quality people. This too may have had an impact on the quality of advice and on the potential for innovation.

With a sensible approach to procurement and good client leadership, it should be possible to create an environment which allows consultants to deliver optimal solutions while also providing good value for money in terms of their fees. This requires a better approach than awarding contracts on the basis of the lowest price, with the key issue being the quality and experience of the people deployed on the project. While there will always be competition on quality and price, the industry needs efficiently managed businesses to be able to reward their staff fairly and make a reasonable profit, if it is to be sustainable.

Customers need the support of an effective and vibrant consultantancy industry and it is perverse to think that good firms may be driven out of business through a procurement approach which focuses on the cost of everything and the value of nothing.”

John Horgan, group managing director, Europe, Middle East and India, URS

"In the past 30 years, our industry has moved from a craft-based technology to a technology-based process. Manual calculations and drawing boards have been replaced by investment in more capital equipment, and consequently costs and manhours per task have been reduced. Although still in its relative infancy, Building Information Modelling (BIM) is contributing to efficiency and a reduction in cost. However much of BIM's value depends on the skill with which it is applied.

Fee competition is ferocious and the shift towards the ‘mechanisation’ of production is in part a direct consequence of this pressure. As a result some of our industry is commoditised. Is that a bad thing? Could standardisation improve quality as well as cost? Without going into a Zen and the Art of Motorcycle Maintenance-style treatise on the nature of quality, engineering in other industries has long been concentrated on cost-reducing standardisation. In the automotive sector, for example, the links between design and fabrication are much less dependent on interpretation and bespoke solutions that are so common in our industry.

There is however one area that is resilient to commoditisation. As consultants, our ability to continually innovate demonstrates the value we deliver.Clients and stakeholders sometimes want bespoke or iteratively engineered solutions for the same price as the standard product. The balance between beautifully engineered aesthetic solutions and cost is a fine one – after all, the products of our labours last for many generations. i have long held the view that respect is won and cannot be demanded. Our reputation is in our own hands. At URS we have built deep relationships with some of the most significant clients on the planet.

As an industry we should be judged on the quality of work we deliver. This must be the benchmark against which everything is measured."


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