Growth in environmental consultancy revenues fell last year to 4.4%, with election uncertainty and a slowdown in large infrastructure projects largely to blame, research has revealed.
Consultancy revenue growth fell 4.4% in 2015, compared with increases of 6.6% and 4.9% in 2013 and 2014 respectively, according to Environment Analyst’s annual market trends survey. The dip was more pronounced for large firms (those with revenues of more than £10 million). Their growth in 2015 averaged 3.8% compared with 5.5% in the previous year. Smaller consultancies reported average growth of 4.6% for 2015, similar to 2014.
The researchers said the downturn was due to the general election, as developers delayed investment decisions and government bodies waited for clarification on policies and spending plans. Four in ten survey respondents said that their business had failed to see any growth in 2015, with around 20% reporting declining revenues. A further 19% said sales were static. Around 27% said their revenues grew by 10% or more, however.
The top three growth areas, averaging 9% or more, were: ecological/land management; environmental and sustainability policy and strategy; and climate change and energy. Meanwhile, the only two service areas to show poorer growth ratings in 2015 compared to 2014 were contaminated land/remediation and environmental liabilities, risks and hazards. The reduction in work from the oil and gas sector is likely to be behind the results, Environment Analyst said. International work declined in 2015, with 19% of respondents reporting fewer overseas opportunities, compared to 11% in 2014.
Consultancies offered a mixed outlook for the year ahead, with larger firms expecting growth of 3.7% in 2016, while smaller firms targeted growth of 7.2%. More than half of respondents (59%) cited Brexit as the single biggest business risk, despite the fact that the poll took place before the outcome of the referendum was known. However, 21% said leaving the EU would good for their business.
In terms of recruitment, survey respondents reported average expansion of 3% in 2015, similar to the previous year (3.3%). Workforces at larger firms increased on average by 5.9% (up from 3.8% in 2014) compared with an average 2.1% rise in staffing at small consultancies. Some 8% of respondents in large firms reported job losses last year, after three years no reported redundancies in UK operations.
Two-thirds of survey respondents said that their team had received a pay rise during the previous 12 months, while 17% reported a pay freeze and 16% reported pay cuts. Employees in large firms enjoyed pay rises worth 2% on average, with pay for those working in smaller firms declining slightly (–0.2%).
David Symons, environmental director at WSP | Parsons Brinckerhoff, said: ‘The challenge for the sector is to find ways to continue to grow and also to be at the heart of addressing the pressing global environmental challenges such as biodiversity loss, climate change and sustainable resource use. This will require innovation, new ways of thinking and relying on new drivers of growth, not just regulation.’
