Clients generally indicate a good level of satisfaction with the services they are receiving from environmental consultancies, although many with whom we spoke had experienced minor problems. These views are supported by healthier order books compared with a year ago. Consultants believe that enforcement of existing UK and EU legislation is the most important driver for the sector, followed by new UK and EU policy initiatives. The current buoyant state of the UK economy is also fuelling demand, and overseas opportunities are assisting the growth of the larger operators. Voluntary initiatives by industry are rated as the least significant driver - although consultancies believe that the new Government will stimulate the business community into more environmental initiatives and therefore generate additional work for the consultancy sector.
Consultants believe that pressure on fee rates is the overriding factor limiting their business.
Indeed, ENDS' survey has found that average fee rates have declined in real terms since our previous two market analyses. In most work areas consultancies are saying that fee rates are static or improving, as are contract values. Some operators have increased profitability through efficiency drives. But the likelihood is that, while the larger players improve performance, medium-sized operators will feel even more pressure than in previous years due to their relatively high overheads, particularly on marketing and quality assurance. And consultancies faced with investor pressure for constant improvement will need to find novel ways of adding value to their businesses which break the tyranny of low fee rates that besets the industry.