Consultants vie for municipal business
As privatization takes root in communities nationwide, cities and counties increasingly have turned to consultants for guidance in achieving both a competitive edge and operational efficiencies. Savvy municipalities that know how solid waste consulting firms view their futures can capitalize on these firms’ increased value-added services to boost their own efficiencies.
Despite reports that indicate an unprecedented decline in the number of environmental consulting firms, experts in the field say it is still a buyers’ market. While many smaller firms that specialized in declining markets like recycling or hazardous waste have in fact gone by the wayside, others have simply shifted their focus.
At the same time, plenty of new players have sprung up in response to emerging niche markets. New and well-established firms alike have positioned themselves as full-service consulting firms offering long-term client relationships. “In the last 10 or 15 years, the industry has become mean, lean and more competitive,” notes Elwin Larson national director of the waste and energy group of Omaha, Neb.-based HDR Engineering.
Still, this has not put a damper on earnings. Future Technology Surveys, Norcross, Ga., conducted a survey that concluded environmental engineering firms reaped $15 billion in revenue in 1996, up from about $10 billion in 1994. Moreover, revenues are forecasted to increase 4 percent per year through 2001.
So what do consultants view as their business cornerstones for the next several years? According to the survey, the emerging niche markets for environmental consultants include environmental management, risk assessment/risk-based closure and full-service assignments such as design/ construct and own/operate projects.
“The public sector is feeling competitive pressure from the privates,” says Larson. “[Consultants] have to help them keep construction costs down and reduce operating costs.” In addition, as streamlined staffs become the reality at waste facilities, governments are opting to employ consultants in either advisory or managerial roles.
“Particularly with the more specialized facilities, our clients either don’t have the capability to manage or the necessary resources to invest,” explains Bob Hauser, senior vice president and solid waste practice leader at Camp, Dresser & McKee, a Cambridge, Mass., engineering and consulting firm.
And in response, consultants are boosting their capabilities to handle this demand. In the role of management consultants, firms are evaluating municipal waste systems, advising on matters of finance, investigating facility privatization, performing benchmarking studies and researching permitting prior to constructing facilities.
While full-service consulting is not a revolutionary idea, this approach will be the wave of the future as more municipalities realize the benefits of long-term relationships, predicts Bob Stearns, president of SCS Engineers, Long Beach, Calif.
For instance, hiring one consulting firm to design, construct and then operate a facility can ease risk management concerns since responsibility is assigned only to that party.
Additionally, Stearns notes, insurance underwriters have become increasingly sophisticated in their understanding of environmental risks. “[Consultants] are able to buy the coverage we need and as much coverage as our clients want us to have on their behalf,” he says.
However, although municipalities may delight in the number of firms vying for their services, they should not be duped into believing that the firms will outrageously expand their portfolio of services or bend over backwards for municipal business.
“There is a perception out there that, in order to keep their people busy, consultants are willing to cut their price for services below cost and actually lose money,” HDR’s Larson says. “But [consultants] aren’t going to be in business for very long if they’re losing money.”
Municipalities may also be tempted to unite with each other, using technology to share consultants’ expertise. Telephones, faxes and the Internet allow separate governments to pool their knowledge and expertise by calling one consulting firm.
Although such networking has its benefits, nothing can replace a consultant’s thorough knowledge of a given municipality’s unique regulations and regulators when the time comes to assess firms for a project. Hiring a locally-based consultant is one option; however, many national firms also employ local experts who understand the soils and geological makeup of specific regions and municipalities.
Hauser says municipalities should look beyond the bottom line when they select a consultant. “They should select a firm not only on its ability to be price-competitive but also on its relationship and its ability to deliver,” he says.