Design Firms Bet On Water And Wastewater Sectors
Even as they continue to see increased revenue, MidAtlantic design firms are steeling themselves for any softening economic conditions. Several participants in the ENR MidAtlantic Top Design Firm survey say they are positioning themselves to capitalize on infrastructure work—especially in the water and wastewater sectors—to provide a boost that could propel them through the next downturn.
“It will only take a couple more extremely cold winters to see some serious water stream issues that are going to have to get the politicians’ attention,” says Jeffrey Lighthiser, chief executive of Richmond-based Draper Aden Associates Inc.
MidAtlantic firms are already seeing gains in the water sector. Firms participating in the survey reported $268.71 million in water supply revenue, up from $245.6 million in the previous year. SmithGroupJJR, which was ranked No. 45, had $29.77 million in regional revenue. It is completing a new headquarters for Washington’s DC Water that is scheduled to be completed in the fall. The 150,000-sq-ft headquarters will have a wastewater heat exchanger that taps into the forced sewer main in the pumping station below the building to provide heating and cooling “from an endless supply of energy underground,” SmithGroupJJR says.
Overall, the 114 firms in this year’s ranking—which hail from Delaware, Maryland, Pennsylvania, Virginia, Washington, D.C., and West Virginia—had $5.3 billion in work performed and billed in 2017. That’s up 10.4% from last year’s survey, when 107 firms reported a combined $4.8 billion in revenue in 2016.
The top 10 firms in this year’s survey did see their combined regional revenue decline, to $2.1 billion in 2017, from $2.8 billion in the prior year.
But No. 5 Stantec said its revenue rose to $162.21 million from $160.8 million in 2016. And the firm is projected to grow again this year, says Ron Boyd, vice president and MidAtlantic regional leader. Boyd says aging infrastructure will continue to provide work for the region’s firms “whether it’s transportation or water—those are the big ones. We see those continuing to be the bread and butter for our engineers.”
For example, the firm is designing the $40-million Edmondson Avenue Bridge replacement in Baltimore. The structure will be replaced in two construction phases while maintaining traffic along a busy artery before the project is completed in 2021.
Party of Three
With federal funds limited, states continue to turn to public-private partnerships to help finance work. Several P3s are underway or about to start in Virginia. The $3.6-billion Hampton Roads Bridge-Tunnel Expansion is in the request-for-proposal stage. The project includes a four-lane bridge tunnel and will also widen the four-lane segments of I-64.
AECOM again is the top-ranked regional firm, though its revenue dipped to $637.05 million from $655.66 million. It broke ground last year on the I-395 Express Lanes P3 in northern Virginia. The $350-million project includes expanding and converting two existing reversible high-occupancy-vehicle lanes on I-395 to three managed high-occupancy-toll or express lanes for eight miles, ending near the Pentagon.
WSP USA, the No. 13 firm with $127.89 million in revenue, is the owner’s representative on the Maryland Purple Line light rail project. Construction on the $2.6-billion P3 is ramping up this summer, including tunnel excavation in Silver Spring. When completed—the target date is 2022—the Purple Line will run 16 miles, from Bethesda to New Carrollton.
Jerry Jannetti, WSP senior vice president for the Northeast region, says P3 work requires design and construction firms to “understand where the other one is coming from” despite the fact that their cultures differ.
Search for Labor
Design firms continue to struggle with a labor shortage in the region. Even though Draper Aiden uses an outside recruiting firm and employs three full-time human resource people in house to search for workers, Lighthiser says the firm still doesn’t always find the talent it needs. “I don’t think I’ve ever seen the labor market as tight as it is right now,” he adds. The firm, which participated in its first survey since 2015, was ranked No. 32 this year with $39.6 million in revenue. The firm was No. 37 in the 2015 survey, with $23.15 million in revenue.
Jannetti says WSP used to be able to lure talent to the Mid-Atlantic from less busy regions but now is unable to deploy that tactic because the volume of work has picked up in other areas, too.
Boyd says Stantec has acquired firms to fill gaps in its regional portfolio. That strategy also has helped maintain the firm’s workforce. Retaining acquired firms’ employees and clients “is a whole lot easier than going out and finding new projects all of the time,” he says.
Stantec recently acquired MWH Global Inc., a Broomfield, Colo.-based engineering, consulting and construction management firm focused on water and wastewater work, a service Stantec didn’t previously perform in the region. “We are starting to see new contracts won,” says Boyd, who adds that water infrastructure projects are “one of our biggest growth areas in the MidAtlantic.”