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Geotechnical Services File: Future worries

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A steadying ship may be one way to describe the UK geotechnical market, yet the positive figures from data provided for this year’s Geotechnical Services File belie a sense that not all is quite as stable as hoped for.

The key headlines will offer comfort to industry watchers – the total geotechnical turnover figure for all firms entering the Geotechnical Services File (GSF) this year comes in at around £1.6bn. And around 11,000 geotechnical staff are employed in the market (not to mention the thousands of non-technical employees on top of this figure).

These are not insignificant numbers. And even more good news comes when we look, year on year, at how much the top 35 are bringing in. Turnover reported by these businesses has gone from around £1bn in 2014 and 2015 – a level previously last seen in 2007 – to £1.2bn last year. This year the figure has climbed to £1.27bn, in line with prediction from firms completing last year’s GSF survey.

Top 35 companies based on turnover
 Company£(M)
1 Balfour Beatty Ground Engineering 96
2 Van Elle 84.2
3 Fugro 80.3
4 Cementation Skanska 80
5 Aecom 69
6 Keltbray Piling 67
7 Bam Ritchies 65.5
=8 Bachy Soletanche 60
=8 Keller 60
10 Groundforce Shorco 59.1

Over half of the firms surveyed were feeling buoyant about their current prospects. Some 57% felt their prospects could be up year on year (most of those were evenly split between those expecting a 10% or 20% increase in geotechnical turnover for the coming 12 months). The rest firmly believe that turnover will remain static over the next 12 months, with just 2% expecting a dip of 10% year on year.

Despite the apparent confidence in the quantitative data, the qualitative information urges a note of caution about celebrating a market that is secure about its future.

GSF firms’ views on the biggest challenges facing the geotechnical industry, are fascinating. Few are directly concerned about workload, with around 10% facing what some may see as the best kind of problem in the form of too much work, and just 6% saying they had too little work.

The former seems a little at odds with the most popular concern (cited by 59% of respondents) that the industry continues to face a skills challenge, given that there is not quite so strong a belief that despite the continuing sense that skills are lacking, the industry is mostly confident in its ability to deliver work coming its way. And once again, a concern, almost evenly split between consultants and contractors, that squeezed margins were a continued challenge.

Fears about the effect the 2017 General Election could have on the industry were also prevalent. This year the GSF survey’s launch coincided with the announcement that an election was weeks away. Far from engendering the “strong and stable” mantra of the Tory campaign, the effect was a destabilising one for around four in 10 of those surveyed.

Top 10 firms based on staff numbers
CompanyStaff

Fugro             

645

Aecom           

550

Van Elle

533

Atkins

446

Balfour Beatty Ground Engineering

440

Bam Ritchies

415

Bachy Soletanche

380

Cementation Skanska

380

RSK Group

371

WSP

330

Arup

 

While firms were not directly asked about Brexit, almost every respondent raised the issue of what Brexit might mean for their business or the industry as a whole when asked to give their thoughts about other challenges on the horizon.

Inappropriate transfer of risk from client to contractor was a concern for a not to be ignored 28% of respondents. Indeed the challenges clients pose was not limited to just risk. Concerns were raised that too little was being done by those holding the purse strings to enable the industry to be as effective as it perhaps could be.

“Large ineffcient organisations working on major infrastructure projects failing to plan for delivery,” cited one respondent, adding that work was “slow to be issued” and specialist geotechnical firms were only involved in projects “when it is too late to make a difference”.

 

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