The power firms in heritage consulting
Engineering News-Record recently released its list of The Top 200 Environmental Firms. Published annually, this year’s list is based on 2011 revenue.
|Rank||Company||Heritage Services||Revenue (million)|
|1||CH2M HILL Ltd.||Yes||$3,835|
|3||Veolia Environnement SA||No||$3,294|
|5||Tetra Tech Inc.||Yes||$2,050|
|6||AECOM Technology Corp||Yes||$1,768|
|8||The Shaw Group Inc.||Yes||$1,559|
Half of the top ten firms on the list provide in-house compliance services for heritage resources. On a similar list of design firms, seven of the top ten firms were in-house providers of heritage services.
Unfortunately, what most people want to know about these firms isn’t available: how much of their overall revenue comes from their heritage consulting activities. While most of these companies are publically-traded companies and report their financials, the filings are not fine enough to go down to the level of heritage services.
Many in the heritage industry would argue that these firms aren’t really heritage firms at all because they provide additional services. Ignoring them, though doesn’t make them go away. Firms that only provide heritage compliance services compete with these firms head-to-head for work. It may not be as visible, though, because the heritage work that the power firms do is packaged in large contracts that include design, natural resource, engineering, and construction work. Within the U.S., more and more heritage compliance work is contracted as NEPA projects with the full spectrum of environmental analyses and assessments. NEPA is the U.S. federal law called the National Environmental Policy Act–an umbrella law that includes heritage resources. Most heritage-only firms never see these larger NEPA projects unless one of the power firms subcontract this work. What we are now seeing, though, is that these environmental and engineering firms are doing more and more heritage work in-house, and subcontracting less.
The power firms are never going to compete for small, heritage-only projects. There may be a niche for heritage-only firms into the future. This niche, though, is getting smaller as clients opt for “one-stop-shopping” for their compliance needs. A heritage-only firm doing, say, $14 million a year in annual revenue (the threshold for being a large heritage firm in the U.S.) can’t compete with the marketing might and resources that the power firms have to bear. I occasionally hear colleagues say that the heritage division of a large environmental or engineering firm had to have taken a loss on some particular project. That may be true for the heritage component of the project, but the project overall may have been very profitable. Because the heritage component of a large multi-disciplinary project may be small, the power firms have the resources to subsidize heritage work and undercut heritage-only firms.
The dynamic of multidisciplinary versus heritage-only firms is interesting. After years of defining the compliance services sector of the heritage industry as the domain of heritage-only firms, it is time to acknowledge that all firms providing heritage services are a part of the heritage industry. This means that, at least for last year, the largest heritage firm was CH2M HILL with over $3 billion in revenue.