MEP Giants revenue increases, along with staffing concerns

The 2017 MEP Giants gross revenue increased as compared with last year, likely due to company mergers and larger and more varied projects. MEP/FP design revenue also increased.
By Amara Rozgus and Amanda Pelliccione, Consulting-Specifying Engineer, CFE Media August 10, 2017

Among those employed by the 2017 MEP Giants, there are 22,808 mechanical, electrical, plumbing, fire protection, and environmental engineers (a slight increase from last year’s 21,900). Nonengineering staff comprises 134,802 employees, which is a decrease from the previous year’s reported 141,203 people. Courtesy: Consulting-Specifying EngineerThe 2017 MEP Giants generated approximately $47.65 billion in gross annual revenue during the previous fiscal year, a slight increase from last year’s numbers, in which firms generated $47.43 billion. In 2015, MEP Giants firms generated $41.89 billion in gross revenue. This year, the MEP Giants earned $6.33 billion in mechanical, electrical, plumbing, and fire protection (MEP/FP) engineering design revenue, a 3.6% increase over 2016 revenue of $6.11 billion.

Several companies either joined the list for the first time or returned after an absence in reporting data: Integral Group (No. 25), NV5 Global (No. 44), tk1sc (No. 46), Southland Industries (No. 51), Primary Integration Solutions Inc. (No. 54), Michaud Cooley Erickson (No. 61), Dunham Associates Inc. (No. 62), LiRo Engineers Inc. (No. 80), kW Mission Critical Engineering (No. 87), and POND (No. 98).

Top 10 firms are listed by MEP design revenue. Jacobs topped the list as the No. 1 firm—as it has since 2013—with 14% of its gross revenue dedicated to MEP design. Courtesy: Consulting-Specifying EngineerThe list this year comprises 64% private companies, 24% employee-owned companies, 7% limited-liability companies, and 5% public companies. This is nearly identical to last year’s data.

Several mergers and acquisitions occurred in the past year (23%, which was a slight uptick from the previous year of 21%), changing the name and face of many companies and moving some firms up the list due to a larger combined revenue.

Table 1 shows the top firms based on MEP design revenue, which is how the MEP Giants are ranked. Table 2 shows the top MEP Giants firms based on total gross revenue. The complete table of rankings is provided at www.csemag.com/giants

This shows the top 10 firms by gross annual revenue. MEP design revenue is less than one-quarter at all of these firms, indicating the breadth of their engineering work. Courtesy: Consulting-Specifying EngineerAbout 58.3% of all 2017 MEP Giants’ revenue is generated from MEP design, with an average MEP design revenue of $63.33 million per firm, a slight increase from the past fiscal year, in which average design revenue was reported at $61.11 million per firm.

In a change from past years, 24% of companies reported "staffing: quality of young engineers" as their biggest challenge. In past reports, participants indicated that "the economy’s impact on the construction market" was the greatest challenge, which fell to second place among challenges this year at 14%. This shift is large; 26% of firms indicated the economy was a challenge in 2016 MEP Giants data, indicating that the economy’s rebound is no longer top of mind. Other challenges for 2017 MEP Giants included "evolving information technologies for design or project management" at 12% and "staffing: keeping older engineers trained/current" at 6%. 

Staffing, global revenue numbers

The 2017 MEP Giants firms employ 61,326 engineers, down from 63,688 engineers last year. On average, each 2017 MEP Giants firm has 97 mechanical engineers (up from 83 in 2016), 82 electrical engineers (down from 85), 19 plumbing engineers (up from 17), 8 fire protection engineers (no change), and 22 environmental engineers (down from 27).

This year’s MEP Giants employ 196,128 people, including all types of staff and job titles. Last year, firms averaged 2,241 staff members, both engineering and nonengineering staff. This number was reduced by 12% to 1,961 for the 2017 MEP Giants.

This year’s firms engineering staffs are made up of 14% females (up from 13% last year). On average, 43% of nonengineering staff are female.

Specialized accreditations include LEED Accredited Professionals (at any level) at 4.3% and commissioning agents or professionals (CxA or CxP) at 0.87%.

In 2017, the MEP Giants earned 89.5% of their MEP design revenue for U.S.-based projects, an increase from last year (83.9%). Several opportunities are open to MEP Giants outside the United States. Engineering services are provided in North America (Mexico, Canada) 56% of the time. Other areas of growth include the European Union (34%), Asia (33%), the Middle East (32%), the Caribbean (23%), and South America (19%). Projects in the European Union jumped the most, from 27% in the last reporting period to 34% in this fiscal reporting period. Asian projects dropped from 42% to 33%, respectively.

Similar to data from previous MEP Giants research, the amount of new construction is nearly the same as retrofit/renovation work. These numbers have remained constant over several years. Courtesy: Consulting-Specifying EngineerWhen it comes to sustainable engineering, the number of U.S. Green Building Council LEED projects increased for this reporting period; 1,553 projects were submitted for LEED certification in the past fiscal year, whereas 1,332 projects were submitted for the previous reporting period. The number of projects submitted in the past fiscal year to the U.S. Environmental Protection Agency’s Energy Star Buildings Label decreased by 11% over the previous reporting period. 

Project types

The 100 firms listed here don’t handle all aspects of engineering. Many subcontract specialty services including acoustics (71%), computational fluid dynamics modeling (20%), construction management (20%), and security system design (20%). More firms are bringing some specialty services in-house, including chilled water or boiler system design, electrical system design, and plumbing design.

As shown in Figure 2, MEP Giants indicated that they split their time between new construction (44%) and retrofit/renovation (38%), which has deviated only slightly from past years. Rounding out the projects are maintenance, repair, and operations (7%); commissioning or retro-commissioning (7%); and "other" (3%). For a more in-depth report on commissioning, read the October 2017 issue on the Commissioning Giants.

The 2017 MEP Giants firms continue to work on several projects in hospitals and health care facilities, office buildings, industrial/manufacturing facilities, and schools. Figure 3 breaks down the various building types in which MEP Giants firms work; the health care and office building markets were at the top for this reporting period, as they were last year. Read about several project profiles at www.csemag.com/giants.

Companies are well-rounded

The 2017 MEP Giants earned revenue in four key building types: hospitals/health care facilities, office buildings, industrial or manufacturing facilities/warehouses, and colleges or universities. Industrial or manufacturing facilities/warehouses is new to the top building types this year. Courtesy: Consulting-Specifying EngineerSeveral new questions were introduced in the past couple of years to help provide a broader picture of how the MEP Giants firms are managing their businesses. Some interesting facts about the 2017 MEP Giants: 

  • New York again tops the state in which firms are headquartered.
  • Many firms have lead engineers or experts who handle a particular focus: business development director (87%), chief electrical engineer (85%), chief mechanical engineer (84%), and commissioning engineer or coordinator (80%).
  • Aside from traditional labor and overhead costs, a percentage of MEP Giants spend capital funds on new tools (such as software or hardware, 26%), capital improvement (such as office space, 17%), and promotions and marketing (16%).
  • Private project or building owners remain the No. 1 source of work/clients.

Methodology

At the beginning of the year, the Consulting-Specifying Engineer (CSE) staff collected and analyzed data from several consulting and engineering firms. Some of the top mechanical, electrical, plumbing, and fire protection (MEP/FP) engineering firms submitted their firms’ profiles to CSE; however, not all consulting firms were willing or able to participate in this year’s MEP Giants survey. The minimum MEP design revenue required for consideration is $5 million, although the smallest firms on this list far exceed that minimum (the smallest amount of MEP design revenue reported this year was nearly $11 million).

In 2017, more than 100 engineering firms provided their information for the MEP Giants program, with some newcomers or firms re-entering the program. A tie (No. 62) is unusual, but not unheard of. Data and percentages are based on the top 100 companies that responded to the request for information; the results do not fully represent the construction and engineering market as a whole. However, with nearly identical questions asked in previous years and more than 100 engineering firms participating this year, we present a qualified portrait of where the top engineering firms stand in 2017.

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