Davis Langdon wants to compete with McKinsey. But can it really find a place at the top table of global management consultancies? And will the rest of the quantity surveying industry follow it
It was quite the gauntlet. Last week Rob Smith, senior partner at Davis Langdon, announced that the firm planned to transform into a 鈥淢cKinsey-like鈥 consultant for the 鈥渂uilt, natural and social environment鈥. Name-checking the world鈥檚 premier management consultancy was a bold move, and one that raised an interesting question for the rest of the industry: could UK firms with their roots in quantity surveying become the elite management consultants?
Management consultancy - offering advice to businesses long before building plans are on the drawing board - is nothing particularly new for QSs. Most now rely on it for a sizable and growing chunk of their revenue (see box, overleaf). EC Harris, which rebranded itself as a 鈥渂uilt asset consultancy鈥 in December 2008, says that what it calls 鈥減ure strategy work鈥 has increased by 50% over the last two years. But while it鈥檚 a nice little earner, picking a fight with mega-consultancies such as McKinsey, Pricewaterhouse Coopers, Deloitte and KPMG on their own turf is a very different task.
For Davis Langdon (DL), management consultancy made up just 4% of revenue in Europe and the Middle East in the financial year 2008-9. It has not claimed it will compete with McKinsey in every area - just where construction, infrastructure and asset management are concerned. But if it did manage to give McKinsey a run for its money in just one sector, it could blaze a lucrative trail for the rest of the industry to follow.
Playing in the big league QS consultants are currently seen as one or two places below McKinsey in the consultancy pecking order. 鈥淎t the top are the likes of McKinsey, and then slightly below them the big four [Deloitte, KPMG, Ernst & Young, Pricewaterhouse Coopers],鈥 says one Cyril Sweett director. 鈥淭hen comes the middle range: companies like EC Harris, DL and Mouchel, as well as individuals.鈥
Consultants from McKinsey and other top-tier firms are generally paid 50-100% more per hour than professionals from a QS firm. Smith would not be drawn on the extra money the move up could make DL, but when a top brain from McKinsey can bring in 拢3,000 a day, it鈥檚 hardly surprising the company wants to move into this league.
So, how likely it is to succeed? Well, DL has made a start. In a recent contest for an 鈥渁sset optimisation鈥 contract for a 鈥渂ig global client鈥, it says it was picked over McKinsey, Deloitte and Gensler. It has also set up a team to undertake this work - Knowledge Agenda, as it is officially known. Erland Rendall, director of DL鈥檚 Abu Dhabi office, is to head up the Knowledge Agenda and under him will be a team of about 20 people.
Yet industry figures are sceptical. Many admire Rob Smith鈥檚 ambition, and all agree that 鈥済etting under the skin鈥 of clients as early as possible is the way of the future.
But some question how quickly DL can transform itself and its reputation. 鈥淚t鈥檚 quite a leap,鈥 says the head of a rival QS and project management firm. 鈥淚t鈥檚 a space where there are a lot of people. There will be a lot of competition.鈥
Others question the lack of specifics. 鈥淲hat hard numbers are they putting forward?鈥 asks Jonathan Hook, UK construction and housebuilding leader at Pricewaterhouse Coopers. 鈥淲hat revenue estimates?鈥
The skills to do the job
As DL prepares for the big push, some in the industry have also questioned whether it has the skills needed to do the job. As a top management consultant, it will need to offer clients far more than quantity surveying with a bit of strategic knowledge on the side. But it seems that since the deal with Aecom, the relevant people are flowing out, not in. Simon Rawlinson, who was prolific in writing McKinsey-style research pieces, has left to head up EC Harris鈥 strategic research team.
DL CVs are flying across the desk of one highly placed source at Drivers Jonas. Perhaps the applicants are betting that Drivers Jonas, which was bought by Deloitte in January, is now in a much better position than DL to move into the McKinsey market.
Then there鈥檚 the question of whether trained QSs can be turned into management consultants. 鈥淒oes a good footballer become a good football manager? Do you want Wayne Rooney managing your team?鈥 asks Michael Thirkettle, chief executive of McBains Cooper. 鈥淚n McKinsey people are brought in with a business mind, but people in our industry need to have developed into that.鈥
Then there鈥檚 the scale of the mountain to climb. One source illustrates just how lofty McKinsey鈥檚 reputation has become. 鈥淭here鈥檚 a joke in the health service: 鈥橬o one has ever been sacked for employing McKinsey鈥,鈥 he says. Jeffrey Skilling, a former McKinsey high-flier who became better known as chief executive of Enron, infamously said the firm was 鈥渄oing God鈥檚 work鈥.
Can a British QS such as Rob Smith adopt such religious levels of self-promotion?
We will have to wait and see. Given its reputation as the Rolls-Royce of quantity surveying, however, DL looks like the right firm to lead the way.
The industry鈥檚 view
Richard Steer, senior partner at Gleeds, offers Davis Langdon this advice. 鈥淒on鈥檛 bid too low, and you have to have people who are specialists,鈥 he says. Snatching the best clients away from established consultants will be an enormous task, because 鈥淧ricewaterhouse Coopers and Deloitte have entries into the highest levels of corporations and government鈥.
The industry should aim high - but not too high, according to David Bucknall, chairman of Rider Levett Bucknall. 鈥淲e can compete with McKinsey on business studies, but at the level of geopolitics, of advising governments, probably not.鈥
Steve McGuckin, UK managing director at Turner & Townsend, agrees. 鈥淚s T&T ever going to be advising global corporates on strategy? I don鈥檛 see it. But will we give them effective ways to spend their capital? Yes, we already are.鈥
鈥淣ow they鈥檙e part of Aecom I鈥檓 sure DL can do something in that space, but are unlikely to compete with McKinsey in the short term.鈥
A spokesman for McKinsey, rather weary of companies comparing themselves to the enigmatic consultant, which refuses even to reveal its client base, said nobody from the company would speak about DL as a potential rival. 鈥淲e don鈥檛 really rise to that challenge,鈥 he said. 鈥淲e don鈥檛 indulge in that kind of debate.鈥
He was prepared to list the firm鈥檚 competitors: Deloitte, Pricewaterhouse Coopers, KPMG, Bain & Company, Booz Allen Hamilton and Boston Consulting Group.
What about Turner & Townsend, Gleeds and EC Harris? They drew a blank.
Davis Langdon? 鈥淚 might have heard of them.鈥 Clearly DL, like the rest of the industry, has some way to go.
Will DL鈥檚 move open up space in the QS market?
Rob Smith is adamant that competing with McKinsey will not draw Davis Langdon away from traditional quantity surveying. 鈥淚t isn鈥檛 about stopping what we were doing before, it鈥檚 about getting in earlier [with clients],鈥 he says. But could its change of tack allow competitors to move their tanks onto DL鈥檚 QS lawn?
Paul Maitland, a director at Turner & Townsend, believes that if DL does try to reposition itself as a high-end consultant, it could start to shed clients looking for a traditional QS, although rivals were unlikely to see a sudden glut of work.
鈥淭here will be a short-term hit if they try to distance themselves from that market. But it would barely register overall because their work would be spread over a large number of organisations,鈥 he said.
Richard Steer, senior partner at Gleeds, said the move could alienate clients. 鈥淲hen the client feedback for the DL acquisition appears to have been mixed at best, it seems odd that the business would appear to be further distancing itself from a core business competency for which it is well know.
鈥淎s for DL creating a vacuum, it is more a case of Gleeds and others in the market offering a clear vision of what they represent to the client,鈥 he said.
Mind the gap management consulting turnover
- $6bn McKinsey
- 拢1.4尘 McBains Cooper
- 拢20.7尘 Gleeds
- 拢16.8尘 Turner & Townsend
- 拢19.7尘 Cyril Sweett
- 拢10尘 Rider Levett Bucknall
The turnover figures for the QS firms are approximate. McKinsey does not release financial information, but Forbes estimates that it had turnover of $6bn in 2008
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