MEP Giants revenue, mergers, diversification increase

The 2015 MEP Giants revenue ticked up slightly, while firms continue to diversify the services they offer, the countries in which they work, and project types.
By Amara Rozgus, Editor in Chief, Consulting-Specifying Engineer, Oak Brook, Ill. August 17, 2015

Table 1: Top 10 firms are listed by MEP design revenue. Jacobs topped the list as the No. 1 firm—as it has since 2013—with 15% of its gross revenue dedicated to MEP design. All graphics courtesy: Consulting-Specifying Engineer

The 2015 MEP Giants generated approximately $41.9 billion in gross annual revenue during the previous fiscal year, a 6.3% increase from 2014 in which the firms generated $39.5 billion in gross revenue. This year, the MEP Giants earned $6.86 billion in mechanical, electrical, plumbing (MEP), and fire protection engineering design revenue, a 7.4% increase over 2014 revenue.

Several firms either joined the list for the first time or returned to reporting data for the list this year: CRB Consulting Engineers Inc. (No. 12), JENSEN HUGHES Inc. (No. 13), Glumac (No. 19), Jaros, Baum & Bolles (No. 20), Bury (No. 22), TTG Engineers (No. 31), Robert Derector Assocs. (No. 35), Alfa Tech (No. 52), Michaud Cooley Erickson (No. 62), Morrison Hershfield (No. 71), BSA LifeStructures (No. 74), BRPH (No. 85), RTM Engineering Consultants LLC (No. 87), Peter Basso Assocs. Inc. (No. 89), and MKK Consulting Engineers Inc. (No. 95)

Table 2: This shows the top 10 firms by gross annual revenue. MEP design revenue is one-third or less at all of these firms, indicating the breadth of their engineering work. A couple of larger firms opted not to participate in the 2015 MEP Giants, particularly Buro Happold Consulting Engineers (No. 14 in 2014) and EYP Architecture & Engineering (No. 26 in 2014), which lowered both the gross annual revenue and MEP design revenue for this year. Several mergers and acquisitions occurred in the past year (21% of respondents acquired a firm), changing the name and face of many companies and moving some firms up the list due to a larger combined revenue (see "2014 biggest year yet for mergers, acquisitions").

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.

As seen last year, about two-thirds (64%) of all 2015 MEP Giants’ revenue is generated from MEP design, with an average MEP design revenue of $68.6 million per firm, an increase of 9.6% over 2014.

Participants indicated that "the economy’s impact on the construction market" is the greatest challenge, though the challenge has decreased dramatically year over year. In 2015, 35% indicated that the economy was the biggest corporate challenge; in 2014, 63% of firms reported the economy as the biggest challenge. A major shift in responses about "staffing: quality of young engineers" occurred, with only 18% reporting it as a challenge in 2014 and 26% reporting it as a challenge in 2015. Staffing, succession planning, and recruiting will continue to be issues at engineering firms over the next several years, with no real end in sight as baby boomers retire and the number of engineers graduating from colleges and universities remains flat. This was addressed in the July 2015 editorial viewpoint, "A free way to help young engineers."

Figure 1: Among the engineers employed by the 2015 MEP Giants, 8,174 are mechanical engineers, 7,827 are electrical engineers, 2,536 are plumbing engineers, and 633 are fire protection engineers. Environmental engineers comprise 3,857 of the total.

MEP engineering employment increases

The 2015 MEP Giants firms employ 63,251 engineers, up slightly from 2014. Engineers in the mechanical, electrical, plumbing, and fire protection fields accounted for 19,174 employees, up slightly from nearly 18,800 in 2014. As shown in Figure 1, we’ve accounted for environmental engineers once again, as that sector continues to grow. Mechanical and electrical engineers continue to hold the top two spots—nearly evenly—among all engineers reported.

In 2015, the MEP Giants earned 82% of their MEP design revenue for U.S.-based projects. Several opportunities are open to MEP Giants outside the United States and North America while the U.S.-based construction market continues to recover and grow modestly. Areas of growth include the Middle East (41% of firms are providing services), Asia (40%), the Caribbean (33%), South America (26%), and the European Union (24%). The biggest jumps in international revenue occurred in the Caribbean and Eastern Africa, with revenue in each region increasing by 40.3% over last year’s design revenue.

When it comes to sustainable engineering, the number of U.S. Green Building Council LEED projects increased slightly for this reporting period; 1,463 projects were submitted for LEED certification in 2015, and 1,312 projects were submitted in 2014 (an 11.5% increase). This is a drop from past years—2,285 projects were submitted for LEED certification in 2013, 2,214 in 2012, and 2,365 in 2011. The number of projects submitted in the past fiscal year to the U.S. EPA Energy Star Buildings Label dropped by 31%—only 310 projects were submitted in 2015, whereas 448 projects were submitted in 2014. This indicates that either firms have chosen not to report these numbers or certifications have lost their luster among building clients.

Project types

Figure 2: 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. Note that the total does not equal 100% due to rounding. The 100 firms listed here don’t handle all aspects of engineering. Many subcontract specialty services, including acoustics (67%), computational fluid dynamics modeling (24%), security system design (21%), and construction management (20%). More firms are bringing some specialty services in-house, including controls/building automation systems and/or control sequences and energy modeling.

As shown in Figure 2, MEP Giants indicated that they split their time between new construction (44%) and retrofit/renovation (41%). These numbers have deviated only slightly from past years. Rounding out the projects are maintenance, repair, and operations (7%); commissioning or retro-commissioning (8%); and other (4%). For a more in-depth report on commissioning, read the October 2015 issue on the Commissioning Giants.

Figure 3: The 2015 MEP Giants engineer systems in a variety of different building types. Note that the total does not equal 100% due to rounding. The 2015 MEP Giants firms continue to work on several projects in hospitals and health care facilities, office buildings, and schools. Figure 3 breaks down the various building types the MEP Giants work in; the health care and office building markets were at the top for this reporting period. Read about several project profiles in a special interactive display at www.csemag.com/giants.

Rounding out the data

Several new questions were introduced in the past couple of years, to help provide a better picture of how the MEP Giants firms are managing their businesses. Some interesting facts about the 2015 MEP Giants:

  • 65% are privately owned firms.
  • The state of New York is home to the most headquarters (14%), with Pennsylvania and California tying for second place with 8% each.
  • 1,622 people (on average) account for nonengineering staff at each firm.
  • 13% of MEP Giants’ engineers are female.
  • On average, the MEP Giants reported 405,298 billable hours annually, though not all firms submitted this data (many of the top 10 did not report this, likely skewing the numbers).
  • Top sources of work/contracts come from private owners (via a direct consulting contract), architects, and design-build contracts, respectively.

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 (MEP), and fire protection 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, though the smallest firms on this list far exceed that minimum (the smallest firm’s MEP design revenue was $8.5 million).

In 2015, more than 100 engineering firms provided their information for the MEP Giants program, with some newcomers or firms re-entering the program. A tie in the top third (at No. 35) is unusual. 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 look of where the top engineering firms stand in 2015.


Amara Rozgus is the editor in chief of Consulting-Specifying Engineer.

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