“The World’s 100 Largest Firms Have Been Ranked...But Does It Matter?”
That was the question I posed yesterday, in response to our publication of The WA100, Building Design’s ranking of the world’s largest architecture firms. My conclusion was that ranking, by size, tells you very little about the success of the world’s largest firms. But ranking by income and efficiency? Well, that tells you quite a bit more.
By looking at the Top 5 Fee Income Earners and the 5 Most Efficient Firms of 2012 - and their strategies - we can understand far more what it takes to be successful in this tough market. Since The WA100 is much more than a list of rankings, but also a compendium of information, I went back to the source to investigate these firms more.
The big guns (Aecom, Gensler, etc.) have aggressively pursued a diverse range of projects on an international scale (particularly in China and the Middle East) - a stance that is far from surprising, considering how competitive they are.
More interesting, however, is that the most “efficient” firms (those firms that, while nowhere near the size nor clout of the Big 3, have earned higher fee incomes per employee), have either stayed in strong markets or diversified internationally, creating a niche for themselves in these markets (a strategy discussed at length in “The 7 Things You Need To Know Before Doing Business Abroad”).
Learn the business strategies of the top income earners and most efficient earners of 2012, after the break...
The Top 5 Fee Income Earners
1. Aecom (USA. 1,370 architects employed. Over $400m Fee Income)
US-based Aecom has prioritized pursuing partnerships around the world in order to acquire a diverse range of projects, a strategy that seems to be working for them (the 1,370 architect strong firm had a fee income of over $400 million dollars). The firm has massive transport projects in both Hawaii and Australia, is working on an arena with Snøhetta in San Francisco, a Masterplan in the UK, and many other international projects.
2. Gensler (USA. 1,346. Over $400m)
US-based Gensler has pursued a strategy truly international in scope. The firm has followed demand to Asia, the Gulf States, and Latin America, and has made sure to invest in emerging markets (in Southeast Asia and Latin America) by supporting local talent. Gensler also opened 3 US offices this year and earned over $400 million in Fee income, proving that, despite the economic downturn, this US firm remains as strong as ever.
3. Nikken Sekkei (Japan. 1,109. Over $400m)
While Japanese firm Nikken Sekkei - one of the three biggest earners in the ranking, making over $400 million dollars in fee income - is better known for their big projects in Japan, the firm also used this year to expand into China, Saudi Arabia, and Russia.
4. HDR Architecture (USA. 640. $280-289m)
Starting with HDR Architecture, a US-based firm with 640 and a fee income of $280-289 million. The firm grew conservatively from 626 employees last year and expanded into China (where they now have 2 offices) and Australia. The firm has outlined their goal to grow their international work 5% annually (targeting countries with strong GDP, starting with Canada, and then developing economies as well), and hope to reach 35-40% in five years. The firm is developing a niche for itself in the Science and Healthcare communities, having worked on hospitals (in the US and China), an engineering college (China), and a laboratory (in the UK) this year.
5. Samoo Architects & Engineers (South Korea. 712. $250-259m)
South Korean firm Samoo Architects & Engineers concentrated in their projects in South Korea, but also opened their 6th international office in Doha. The firm now has three offices in the Middle East, 2 in Asia, and 1 in the US.
The Most “Efficient” Firms (Most Fee Income per Employee)
NOTE: as we used Fee Income rather than Revenue, these figures should not be seen as accurate data, but rather used to give a better understanding of company strength.
1. GHD (#65. Australia. 160. $140-149m Fee Income) -- About $906,250 per fee-earning employee
Australian-based engineering, architecture and environmental consulting firm GHD leads the 100-long list as the company that made the highest fee income in comparison to their number of employees. How did they do it? While GHD is a company that has a presence across 5 continents and works in global markets (water, energy, environment, buildings, transportation), they also took full advantage of their location. Australia is currently experiencing a two-speed economy, slowing down in some sectors while speeding up rapidly in others. By focusing their business in Australia's oil & gas, mining, and transport sectors (all vibrant), GHD, with 160 fee-earning employees, was able to earn a fee income of $145 million dollars (that’s about $906,000 dollars per employee).
2. RTKL Associates (#43. USA. 269. $200-209m) -- About $762,082
Since last year’s list, RTKL Associates, a full-service planning, architecture and creative services organization, down-sized drastically from 503 fee-earning employees to 269 (about 47% of its staff) and began concentrating on international work, particularly in Russia, Eastern Europe, and the Middle East (where they have 3 offices). Notably, they have developed a niche for themselves with commercial office towers in Asia, having completed seven towers in China and one in Indonesia.
3. PageSoutherlandPage (#83. USA. 125. $90-99m) -- About $760,000
PageSoutherlandPage, a Texas-based architectural and engineering design practice of 125 fee-earning employees with a fee income of about $95 million, has grown by extending their niche markets. Internationally, they’ve continued designing office towers in the Middle East and US embassies around the world (they recently finished their 21st embassy in Madagascar and will build more in Indonesia and Africa soon). At home, the firm has specialized in markets that remain strong in the US: Healthcare and Data Centre design.
4. Mitsubishi Jisho Sekkei (#34. Japan. 320. $210-219m) -- About $671,875
The name of the game for Mitsubishi Jisho Sekkei has been diversity of work. Although the firm has committed itself to working mostly in Japan (they do have one office in Shanghai), the firm offers a variety of services, from urban planning, to architectural design, to engineering services, and even construction management.
5. HKS (#37. USA. 300. $150-159m) -- About $516,667
Like RTKL and Page Southerland Page, HKS (based in the US) has begun concentrating on growing their international audience. To do so, they have opened seven offices abroad (they have 30 offices worldwide) and concentrated their efforts in the Middle East, where they have three large projects in the works.
