Design Revenue Slides for Fourth Straight Year
The steady slide in revenue among the Southwest's leading design firms continued for the fourth straight year in 2010, according to figures provided by the firms participating in this year's survey. Design revenue from projects located in Arizona, Nevada and New Mexico totaled $1.24 billion in 2010, down 5% from the previous year and 29% below the peak of $1.74 billion in 2006.
“The economic downturn has been a sobering experience and has reinforced our focus on being a company that provides diverse service offerings across a range of sectors,” says Tim Lines, managing vice president of the desert/mountain regions in Stantec's Phoenix office. “I believe the increased competition for each and every project has made us a stronger organization, as clients now have higher expectations for their consultants.” This renewed focus helped Stantec bring in $36.1 million in the region for 2010, moving up two spots to sixth in the overall ranking.
Projects located in Arizona provided surveyed firms with $643 million in revenue in 2010, down almost 5% from the previous year.
“We're cautiously optimistic,” says Laurie Roden, Southwest area manager for the Phoenix office of HDR Engineering. “General transportation has flattened a bit, but transit, power/energy, federal and water are seeing growth.” HDR placed third overall and topped the region's transportation list.
Firms working in Nevada reported nearly $300 million in design revenue, off just 1% from 2009. Some firms even started to see improvement, such as Houston-based PGAL, which saw its Las Vegas revenue rise nearly 5%. “Our workload in the Southwest continued to be strong in 2010 primarily due to continued aviation and military projects, including McCarran International Airport Terminal 3 and Related Facilities in Las Vegas,” says Cathy Boyce, principal at PGAL.
New Mexico firms saw revenue fall nearly 8% to $298.1 million, with little improvement in sight. “The business outlook for 2011 is neutral, with another flat year anticipated,” says Barbara Crockett, vice president and New Mexico area manager in CH2M HILL's Albuquerque office. “Our biggest areas of growth will be in the water and energy sectors and helping clients identify sustainable solutions to addressing the critical nexus of the two.” CH2M HILL has held the top spot in the overall ranking and in the Nevada and New Mexico rankings for an impressive three years in a row.
To survive the recession, many firms had to ask more of their employees. “It quickly became apparent that we were rowing for our livelihood, not just to win the race,” says Kristine Mower, director of marketing for the Phoenix-based architecture firm Orcutt|Winslow. Rather than chase every scrap of work, Mower says the firm made a conscious effort to develop deeper client relationships. “This resulted in a more than 70% shortlist-to-win rate and a number of new clients,” she says.
PGAL has benefited from an efficient use of talent. “We don't confine our professionals to projects in their local regions,” says Boyce. “We make project assignments on the basis of who has the expertise needed for the particular situation, not where their home office is located. That gives us a lot of flexibility and market reach.”
Lines says that versatility and agility are crucial for large international firms such as Stantec during an economic downturn, as offices in different states and countries can collaborate and share work where the opportunity is greatest. “For example, our Tempe office, which focuses on providing services to the world's leading mining companies, has grown significantly over the past year,” he says.
Another sector showing strength is water and wastewater, which grew more than 11% over the previous year. “In the arid Southwest, there is a relentless focus on the wise use and reuse of water resources,” says Tom McLean, vice president and Arizona area manager of CH2M HILL, the top-ranked firm in both the water and sewerage categories. “To that end, the further implementation of advanced water treatment technologies (such as membrane) combined with the use of alternative renewable energy sources is becoming more critical.”