How smaller firms can boost their share of the UK’s infrastructure billions

The UK already has £530bn-worth of major infrastructure projects in the pipeline over the next 10 years, according to the National Infrastructure and Service Transformation Authority.

But how much of this vast sum will go to small and medium-sized engineering consultancies?

While most firms in the sector are SMEs, smaller consultancies often lose out to multinationals when competing for work, particularly on public sector projects.

At a recent ICE roundtable, co-hosted by software firm Projectworks, leaders of civil engineering SMEs discussed how to secure a bigger slice of this market.

They represented consultancies specialising in geotechnics, tunnelling and green energy, as well as multidisciplinary firms offering a variety of services to clients in the public and private sectors.

Painful public procurement

Private sector clients in the UK are often happy to work with smaller consultancies, which tend to offer them direct access to their most senior people. They enjoy the responsive expertise this relationship typically provides.

But winning a public sector contract usually requires bidders to endure a long, complex and costly procurement process that does not favour SMEs.

The system is skewed towards “larger contractors or multidisciplinary consultants”, noted Judith Sykes, senior director at Expedition Engineering. “It’s not set up for the specialist skills an SME can provide.”

Smaller firms that do work on public projects are often appointed via a contractor or larger consultancy, so the client may not even know of their involvement. And sometimes they may not be given enough work to cover the costs they incurred to win the business.

This situation is unlikely to improve. Thanks to the controversial cancellation of High Speed 2’s second phase in 2023, big public projects are likely to take an even more cautious approach to procurement.

Small is beautiful – but a hard sell

SME consultancies tend to offer clients benefits that the big firms struggle to match. These include closer relationships with top-level experts, faster decision-making and less costly services.

Despite this, many infrastructure clients still think they’re taking too much of a risk by choosing an SME over a multinational.

Dr Ohis Ilalokhoin, director of Cardinal Engineering and an ICE trustee, highlighted this problem at the roundtable.

“What do clients really want from an SME? Agility, good quality, quick responses and value for money,” he said. “We need to have very honest conversations with them about what we can offer.”

Making the most of AI

One way in which SMEs might highlight their agility to clients would be to capitalise on the latest advances in digital tech.

The entire sector is still working out whether AI is a productivity tool or a whole new way of doing things.

Firms have used it to perform tasks such as repetitive design calculations more efficiently, but could the technology ever come up with its own innovative solutions? Neil Parry, director at Geotechnical Engineering, voiced his doubts.

“AI will never take over everything,” he argued. “It will get rid of ‘churn’, but you’ll still need someone who understands what’s going on to look at the output. That’s good for small specialist firms, because we’ve got that knowledge.”

A recent US study by the Massachusetts Institute of Technology has revealed that 95% of firms adopting generative AI tools haven’t profited from doing so.

The researchers attribute this largely to the difficulties of integrating such tech throughout a complex enterprise.

On the other hand, individual employees report that applications such as ChatGPT and Copilot are helping them to be more productive.

Consultancies may therefore get the most out of AI – for now, at least – by applying it to routine work. This should give their engineers more time to generate and develop creative ideas.

Skills in short supply

The discussion also covered SME consultancies’ recruitment and development challenges.

Although the whole industry is struggling to attract fresh talent, bigger players do better at this because they tend to offer more generous rewards and structured career paths.

Many SMEs used to look abroad for the skills they needed, but now they must pay overseas graduates significantly higher salaries to meet the new visa requirements. Again, this puts smaller consultancies at a disadvantage.

They therefore need to be more astute with their selection criteria, according to Richard Scantlebury, director at Hewson Engineering.

While his firm is still seeking people with “a certain degree of aptitude in the principles of structural engineering, we’re also looking for an attitude,” he said.

Scantlebury favours candidates who can develop strong relationships with infrastructure clients and help them to understand how this will lead to better outcomes.

“It’s not the person who knows the most about the code [we want]; it’s the one who’ll say ‘we can do this better’,” he explained. “We can train them in the rest of it.”