Slow Economy Yields 'No Major Growth' for Design Firms
As the economy began a slow recovery last year, design firms held on for a long ride. Construction budgets and jobs were still being slashed and projects delayed, although not to the same degree as in 2010. While the ride ahead appears to be a lot less bumpy, design professionals say they are hanging on and are preparing for a long gradual recovery until activity returns to pre-recession levels.
"The positive thing about 2011 was stability as compared with 2010, but, even so, there was no major growth," says Ira Levy, an AECOM executive vice president for the Northeast region.
That was apparent in this year's ranking of the top-100 design firms that participated in ENR New York's annual survey, which lists participants by their revenue in the tristate region. Total 2011 revenue for these firms dropped 3% from 2010 to $3.4 billion.
"Things were still difficult, but job cancellations, for example, weren't like they were in 2010," Levy says. The public sector fared better overall than the private sector, where owners continued to hold back and wait for a stronger recovery, he says.
This year's rankings echo that dynamic as public projects as well as "meds and eds" dominated the list of largest projects to break ground in 2011.
In this climate, finding creative ways to finance projects has been critical for the industry, says Bernard McNeilly, senior vice president and regional manager at Parsons Brinckerhoff, New York. This has helped trigger the trend toward alternative delivery and public-private partnerships. For the design sector, working directly for the owner now means either working"on-call" or through alternative delivery, he adds.
Other major trends include a greater push for LEED certification and green building practices. This is evidenced by recent initiatives from several New York agencies including the Dept. of Environmental Protection, which recently committed to building $2 million worth of green infrastructure at three neighborhood demonstration sites. Such work piggybacks on Mayor Michael Bloomberg's plaNYC program that aims to make the city more eco-friendly, says Doug Owen, chief technical officer at Malcolm Pirnie, the water division of White Plains, N.Y.-based Arcadis. His firm's current projects include the $2.2-billion Catskill-Delaware Ultraviolet Disinfection plant.
Demand for inspection and management services has been strong, "but not so much for planning," McNeilly says. Parsons Brinckerhoff's major jobs in the region include raising the roadway of the Bayonne Bridge, which connects Bayonne, N.J., with Staten Island, N.Y. The project, which will help to accommodate large ships, is in the design stage.
Design professionals are more optimistic about the year ahead, citing positive indicators including funding for capital improvement programs in New York and New Jersey and, to a lesser extent, in Connecticut. They also expect the private sector to pick up.
"We won't have the robustness that we did before the recession," Levy says. "But there will be more opportunity."