Reaping the rewards

Fee income has risen as firms have explored new avenues, says Susie Sell.

Most consultancies seem to have enjoyed a year of rising revenues. Nearly 75 per cent of respondents to the survey said fee income rose between March 2012 to March 2013, against 20 per cent who cited a fall. The top ten earners in this year's survey brought in a total of £283 million, compared to £257 million in 2011/12, and £243 million the year before.

But despite the financial boost that many have experienced, there is widespread optimism that next year will be even better. A total of 76 per cent of firms predict a rise in fee income over the next 12 months.

RPS Group has topped the table again, with a fee income of more than £61 million.

Arup, in second place, reports a significant increase in planning fee income, from £26 million last year to £47 million this year. It says this was due in part to the economic upturn, but also to the firm's re-focus of its philosophy of what it calls integrated planning. This relates to how teams are set up with the aim of helping all disciplines communicate effectively on all aspects of a project, for example, a transport planner's opinion on an economic issue could lead to a different approach being taken.

Malcolm Smith, Arup's global masterplanning and urban design leader, believes that this approach provides a marked advantage and has led to both winning more work and completing it more efficiently.

Smith adds that infrastructure work, covering rail, airports and water systems, was also key to Arup's fee growth. The firm has also been busy with assessment of the outcome of projects. "Increasingly, one has to be able to articulate the value of infrastructure, not just as a technical, engineering outcome," he says.

WYG is another firm that has seen a significant boost in fee income, rising from £22 million in 2012 to £35 million this year. Its work in the energy sector has been a key driver. The firm has been busy working on solar and wind farm projects, including a scheme in Wiltshire for 35,000 ground-mounted solar panels, which gained planning consent earlier this year.

The firm has also been working on the carbon capture and storage project at Drax coal-fired power station in East Yorkshire, and on modernising the national grid infrastructure across the UK on behalf of National Grid.

"We saw opportunities (in the energy sector)," says David Lowin, WYG's head of planning. Being a multidisciplinary consultancy helps, as professionals such as acoustitians, landscape architects and ecologists are all in demand, he says. Lowin adds that the upturn in the economy is also providing a good outlook for the residential sector, and he predicts that there will be a boost in developers building to let.

Wardell Armstrong stands out as a firm that experienced a strong increase in revenue, doubling its fee income from £1.5 million in 2012 to £3 million in 2013. Stephen Stoney, the firm's technical director, attributes the climb to a deliberate change in direction. "We are now putting a lot more attention into the front-end of promoting developments, and being proactive," he says.

Since the change was put in place at the end of 2012, the firm has been working on residential and mixed-use developments, promoting sites and securing allocations in plans. "If we don't seize this initiative now after the spur the government has given, then I don't see when or how we ever could," Stoney says.

Of consultancies who gave data on fee rates, 68 per cent said that they did not change their fee rates in the year ending to 1 September 2013. Seven per cent made a one to four per cent increase, 18 per cent a five to ten per cent rise and 12 per cent a hike of more than ten per cent. Many are planning to maintain fee rates next year, with 77 firms predicting no rise in fee rates. However, 24 are predicting a fee rate hike of ten per cent or more.

Mark Connell, director of planning and development at Jones Lang LaSalle, says that the firm is looking to keep fee rates stable for now. While the economy has been difficult, the firm sometimes undertook small research jobs for no fee, in the hope that this would lead to paid work, he explains. The firm plans to drive productivity by reducing such non-paid work, rather than by raising fees, though it will keep this under review, he says.

Alastair Crowdy, national head of planning, development and regeneration at GL Hearn, believes that consultancies will not have to reduce rates any more now that the market is growing again. They should now be able to raise them in certain situations, for example, if they have a specialist skill, he believes.

"We have probably gone through the worst of it. Now the market is actually coming back," he says.

A table showing the high earning UK planning consultancies can be downloaded as a PDF here.

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