Overview p. 2 // 2011-2012 At a Glance p. 2 // Profitability Analysis p. 2 // Revenue Volume p. 2 // Backlog Analysis p. 2 // A Decade of Design Revenue p. 2 // Markets’ Share of Total Revenue p. 3 // Domestic Staff Hiring p. 3 // International Staff Hiring p. 3 // International Region Analysis p. 4 // Who Bought Whom p. 5 // Market Success p. 5 // Top 20 by Sector pp. 6 -8 // Top 50 in International Markets p. 9 // Technology p. 9 // Top 100 Pure Designers p. 10 // Successful Strategy p. 11 // Top 500 Dialogue p. 12 // Movers and Shakers p. 13 // Top 500 Table p. 14 // Top 500 Index p. 24 SKINS NBBJ designed the 80,000-seat Hangzhou Stadium in Hangzhou, China. NUMBER65 PHOTO COURTESY OF NBBJ OF COURTESY PHOTO Rising Above Economic Woes As design firms in the public sector scramble in stagnant markets, the private sector is showing signs it may be ready to take off by Gary J. Tulacz enr.com April 23, 2012 ENR 1 THE TOP 500 DESIGN FIRMS OVERVIEW 2011-2012 at a Glance Number of Firms Volume (in $ billions) Number of Firms Reporting Profitability Reporting Size of Backlog Total Revenue 427 85.1 Domestic Revenue 256 Domestic Profits International Revenue Higher Domestic Losses Lower International Profits 58.6 Same International Losses 151 105 26.4 86 40 32 Comparing the Past Decade’s $50.1 $49.2 $53.0 $59.3 $69.6 $80.6 $90.6 $80.0 $79.8 $85.1 Design Revenue 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (in $ billions) Source: McGraw-Hill Construction Research & Analytics / ENR. After four years, it appears the U.S. construction mar- down were water (down 3.7%), sewer and wastewater ket has bottomed out and is beginning the slow climb (down 8.3%) and hazardous waste (down 6.1%). out of recession. For many large U.S. design firms, this Domestic markets that are traditionally in the pri- development is cause for both relief and celebration. vate sector or a mix of private and public work all rose. But for other design firms, particularly in the public The biggest domestic market gainer was industrial infrastructure markets, uncertainty about the future process, which rose 24.0%, followed closely by tele- remains a constant. “We used to communications (up 23.3%). Manufacturing was up The signs of the recession’s end can be seen in be just a 9.7%, domestic petroleum design revenue was up 4.6% ENR’s Top 500 Design Firms list. The Top 500, taken service and the power market rose 4.0%. Even the beleaguered provider, but as a group, had overall design revenue of $85.06 billion we now are U.S. buildings design market rose 2.9% in 2011. in 2011, up 6.6%, from $79.82 billion in 2010. This more willing There were 458 design firms on this year’s Top 500 marks the first time in three years the Top 500 experi- to invest in that also sent in surveys last year. Of that number, 288 enced revenue growth for the year. projects.” enjoyed a rise in revenue from 2010 to 2011, while 168 On the domestic side, the picture is not as rosy. The Mike Della had lower revenue. Two firms reported little or no Top 500 did see a gain in revenue from projects in the Rocca, Chief change. U.S., but the gain was only 1.6%, to $58.62 billion in Executive, North America 2011 from $57.87 billion in 2010. This is a far cry from Buildings Show Signs of Life Operations, the record $68.14 billion in domestic design revenue AECOM The general buildings market is the largest design mar- generated in 2008. The international market showed ket, but it continues to be stagnant, although some it is a growing destination for the Top 500 as revenue firms say there are signs of life. “We are doing a lot of from projects outside the U.S. rose 20.4% in 2011 to research facilities for the federal government and uni- $26.44 billion. versities,” says George Little, CEO of HDR. He says Among domestic market sectors, there was a clear that university endowments were hit by the global fi- line between traditionally public-sector markets and nancial market meltdown of 2008, but they now are those associated with the private sector. The largest bouncing back, freeing up funds for new projects. domestic public infrastructure market was transporta- The federal market, on the other hand, is struggling tion, which fell 0.1%, to $13.01 billion in 2011. Also over budgetary issues. “The federal government is in- enr.com April 23, 2012 ENR 2 THE TOP 500 DESIGN FIRMS OVERVIEW Markets’ Share of Total Revenue 21.0% Transportation General $16,748.0 16.9% Building 19.7% $17,824.0 Petroleum 2.7% $14,335.1 Other 6.1% 6.7% Sewer 0.9% $2,332.5 Industrial 7.8% and Waste Water Telecom $5,738.3 Manufacturing $5,185.1 $5,453.6 Hazardous Power $762.0 Waste $1,784.4 6.4% $8,263.4 $6,631.7 2.1% 9.7% (Measured $ millions) Source: McGraw-Hill Construction Research & Analytics / ENR. Professional 249 Professional 63 Increase (Measured in Domestic International Decrease 95 14 firms reporting) Staff Hiring Staff Hiring 132 117 Stayed the Same Source: McGraw-Hill Construction Research & Analytics / ENR. vesting in optimizing existing space and not in major must be able to calibrate the cost-benefit equation and new capital programs,” says Carl Roehling, CEO of show energy efficiencies when employing sustainable SmithGroupJJR. “Public architecture was more of a 458 design elements. Top 500 firms cushion than a savior,” says Steve McConnell, a man- Roehling agrees that sustainability is now a growing sent surveys aging partner at NBBJ. The private sector will bring part of the design process, rather than simply a bolt-on in last year. the buildings market out of the doldrums, he says. afterthought. “However, people now are demanding There are some bright spots. “While most regions proof of benefits,” he says. While many models can remain slow, the corridor from Washington, D.C., to 62.9% show energy efficiencies in a design, “these models are Boston has become steadily busier,” says Brad Perkins, Saw revenue based on a lot of assumptions,” Roehling notes. He CEO of Perkins Eastman. He says that even hous- increases cautions firms not to make promises about how much ing—primarily multifamily rentals—are moving for- between 2010 a design will save or when a design will pay for itself. ward. “Clients such as hospitals and universities who and 2011. had shelved projects early in the recession have decided Energizing the Market that they cannot wait any longer and have restarted AECOM is finding an expanding market on the their building programs,” he says. 36.7% private-sector side, says Mike Della Rocca, chief ex- McConnell says architects must be able to focus on Saw revenue ecutive of North American operations for AECOM. the value proposition. “In this post-recession market, declines He says the firm has a strong interest in what he calls architects must understand that every dollar deployed between “extraction” markets : oil and gas and mining. “We have in a design must have a return of some sort,” he says. 2010 and 2011 a pretty deep bench in the oil and gas sector,” he says. Engineers are also facing owner demands for value. The power market is picking up, particularly in the “Owners are looking at return on investment that de- transmission and distribution area, he says, adding, mands performance as opposed to ‘nice to have,’ ” says “Utilities are making billion-dollar investments in up- Tony Litton, CEO of Sebesta Blomberg. In light of grading the grid.” this demand, engineers must understand the business The industrial-process and petroleum market has advice they provide, he says. been growing and promises to remain strong. “Our McConnell also says that green building is becom- business was up 20% last year, and our industrial work ing part of the overall design process, but architects was up 30%,” says Bob Giorgio, president of global enr.com April 23, 2012 ENR 3 THE TOP 500 DESIGN FIRMS OVERVIEW International Market Analysis Asia and 13.7% Australia $8,540.9 Middle 20.6% 32.3% Domestic Market East 21.7% Canada Revenue: $58.6 $3,626.1 Europe $5,441.6 $5,734.1 68.9% Latin America International Market Revenue: $26.4 4.0% and Caribbean 31.9% Africa $2,032.8 $1,057.4 7.7% (Measured $ millions) (Measured $ millions) Source: McGraw-Hill Construction Source: McGraw-Hill Construction Research & Analytics / ENR. Research & Analytics / ENR. engineering and technology for CDI Corp. manufacturing work is that foreign manufacturers be- The resurgence in the industrial market has helped lieve that now is a good time to build in the U.S. “We firms across the board. “While there is much talk still are seeing a significant amount of foreign direct invest- about the recession, we have seen a major influx of ment,” says Bean. The current U.S. economic condi- project work over the past 12 to 18 months,” says tions are attractive for manufacturing companies look- David J. Blaida, Matrix Technologies vice president. ing to make capital investments here, he says. He says clients that have been holding on to a large “There are Many firms are excited about the potential boom amount of capital now are spending quickly on their some coura- in shale gas using hydraulic fracturing. “The energy facilities and processes.