Up-against-it QS firms are hooking up with other companies, looking for global reach and diversification. But now really isn鈥檛 the right time to get hitched

Over the past four years I have watched - and often written about - the changing face of the QS. Over time we have moved from being surveyors of bills of quantity to cost managers and then in a bid to freshen the brand a little we all became multidisciplined.

Some are saying that the role of the independent surveying practice has had its day and is about to join the News of the World in the heritage collections of the past

My musings are brought about by the current speculation regarding the future of Cyril Sweett and EC Harris, both businesses that have become multidisciplinary in their service offering. Some are saying that the role of the independent surveying practice has had its day and is about to join the News of the World in the heritage collections of the past. Cyril Sweett, for instance, has become half the firm it once was. Now it鈥檚 calling itself 鈥淪weett鈥. I am not sure of the reason for the rebranding. Perhaps 鈥淐yril鈥 was not deemed a modern enough descriptor for the dynamic world of quantity surveying. Last year Davis Langdon joined the huge engineering giant Aecom. It is now called 鈥淒avis Langdon, an Aecom company鈥 and there still appears to be some confusion regarding its unclarified relationship with DL Seah in Asia. Like all businesses faced with great change, it has lost talent along with its independence. However, with Aecom鈥檚 reported reserves of about 拢600m at the end of last year, it鈥檚 likely it will swallow up another construction-related organisation in the near future. The downside of this continued growth by the industrial monoliths is their need to keep getting work at any cost to feed a growing overhead. One wonders at the distorting effect this has on an ever-depleted market.

A business that has made no secret of its desire to embrace change is EC Harris. This is a firm that appears to have embraced more changes than Lady Gaga鈥檚 costume dresser. It has now become a 鈥渂uilt asset鈥 consultancy and openly declared its intention to expand, float on the stock exchange and declares it is quite open to a marriage offer provided the coupling is right for it. The current market conditions therefore present it with something of a challenge and one would speculate that this does not make it as good value a proposition as it might have appeared to be some time ago. Traditionally consultants listing on the markets have been undervalued, which has led some to question whether they were ever really serious about a flotation. A cynic might argue that they never intended to join the footsie and a merger always made more commercial sense. But is it a good time for them or anyone to be entering the 鈥渕arriage market鈥?

A recent quiz of 400 quantity surveyors by the RICS said that 20% of tenders submitted during 2010 and 2011 were priced at sub-economic level. Bids have been described as 鈥渒amikaze in nature鈥 being some 10% below the value of the project. In some cases the prices were pitched at 40% below cost.

To add to the picture of misery, 78% of those questioned think the problem will get worse during the rest of this year. This comes at a time when Wilkins Kennedy reported in June that the number of construction insolvencies has spiked, rising 19% in the last quarter. It is clear that a number of firms are in survival mode and are 鈥渂uying鈥 work. They are ignoring the adage that 鈥渢urnover equals vanity and profit equals sanity鈥.

锘緼 number of firms are in survival mode and are 鈥檅uying鈥 work. They are ignoring the adage that 鈥檛urnover equals vanity and profit equals sanity鈥

All this doom-laden data plays into the hands of the acquisition-hungry suitor looking for a bargain building consultancy. There are lots of good reasons to form a long and meaningful relationship with a bigger firm: global reach, diversification, as well as cross-selling opportunities. Business, however, is all about timing and now is surely not a good time to get hitched unless you are really desperate.

Some of us still value our current independence and we are all driven by the property market one way or another - which is still flat. However as we enter the second half of the year there are some interesting statistics that make for slightly brighter reading. According to Savills, of the 拢3.6bn of City transactions that took place in the last six months, 拢801m were Asian acquisitions. This is compared with 拢198m invested this time last year. Additionally, while the South-east is still the hub, and public sector spending cuts have depressed the North, we are seeing more activity in Scotland, Birmingham and Manchester than this time last year.

It鈥檚 going to be a long-haul recovery but unless you are really in trouble maybe now is not the time to be pulling the emergency merger lever.

Richard Steer is chairman of Gleeds Worldwide

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