In the first of our two-part market review, Environment Analyst explores changes to the competitive landscape, how firms are coping with the skills gap, and how regulation and funding changes are impacting the provision of contaminated land and remediation consulting services.
BY CHARLOTTE EDWARDS, Market Analyst
Environment Analyst’s previous examination of the contaminated land consulting sub-sector three years ago revealed companies were enjoying a tentative return to growth boosted by growing demand from the infrastructure sector, having weathered the downturn brought about by the credit crunch and recession (Environment Analyst 02-Oct-14). Recruitment to boost specialist teams was on the up following several years of redundancies, with firms at that time on the whole predicting continued growth for specialist services in this area.
Although the recovery has not been as fast as many would have hoped for, with the revenues still not quite reaching the £253 million peak recorded in 2008 according to Environment Analyst’s latest market figures (see Figure 1). But positively the contaminated land/remediation consulting segment did grow by 14% to account for a 14.6% share of total UK EC market revenues in 2015, cementing its position as the second largest EC sector for the fifth consecutive year – have been previously knocked off its long-held top spot by the environmental impact assessment & sustainable development service area in 2010.
Many environmental consultancies are now experiencing continuous growth within their contaminated land activities even despite the difficult conditions in some sectors such as oil and gas, largely thanks to the recent strength of the UK’s infrastructure and housing markets. Although the recent solid economic performance indicators have given many the confidence to drive forward recruitment strategies in this area over the last couple of years, the ramifications and uncertainties surrounding Brexit has impacted how they are now viewing the outlook in terms of growth prospects going forward.
Regulation and funding drivers
The realities of the government’s post-recession austerity measures and a decision by the ex-chancellor George Osborne to wind down funding for the Part 2A scheme as of April 2014 – which is set to stop altogether in April this year – has left most local authorities unable to continue their own contaminated land investigations. Consequently the driving force for contaminated land sector has switched even more heavily towards private sector developers and their efforts to identify land ripe for new housing schemes and the planning process itself. The current Conservative government seems happy to leave it this way, having pledged to introduce a statutory brownfield site register for which they want LAs to allow 90% to gain planning permission by 2020. However, this could of course conceivably all change with the impending general election.
Landmark’s head of consultancy and customer services, Chris Loaring, comments: “Councils just don’t have the funding or adequate resources so they have reverted to a different regulatory mechanism, the planning process. Unless a site is severely high risk, they are now deferring all Part 2A site investigation work necessary to the planning process. Putting conditions on applications then makes it the developers responsibility to prove there is not a contaminated land risk on a site.”
Although the government-funded Part 2A work on behalf of LAs itself has itself been winding down, many hard-pressed councils that have seen a brain drain of in-house expertise as a result of funding cuts have been forced to turn to external consultants on an ad-hoc basis to fill the gaps when enforcing the regime. Loaring describes how Landmark has essentially benefited from this trend: “We recently won a tender to fulfil the regulatory Part 2A function of Christchurch and East Dorset Council. We see the trend of councils tendering the work previously designated for a contaminated land officer as one which will absolutely accelerate. We are now in a position where the regulator is outsourced to a private enterprise – which is quite interesting”.
WSP too has seen some key shifts in its customer base as a result of these and other changes, with Moore explaining: “Business in this area has been moving back to how it was before 2007. Property and construction is now our biggest contaminated land market, followed by oil and gas and industrial. We have slightly more private sector clients than public, with approximately a 60:40 split”.
Lucy Thomas says that the developer side of the market is extremely important for RSK too, stating: “We now have more clients looking at what were quite marginal sites, such as landfills, for residential or commercial development. So much so that 60-70% of our UK geosciences contaminated land work comes from the property and development market, and within that market our clients are largely developers.”
The 85-strong consultancy OHES has also sought to extend its services to the development sector having previously focused elsewhere. Bryan Cherry comments: “Before the recession we relied very much on the fuel market rather than property, so we were able to ride out that period of uncertainty. But in the last three years we have expanded outside that market – we are doing more for developers now in property and also supporting business mergers, property sales and acquisitions.
“Taking on people with varying skillsets enabled us to expand outside our original markets, by combining them with our due diligence experience in the oil & gas market.”
Recruitment and skills
Recruitment to help fulfil the expanding order books remains a challenging area for many of these firms, with the sector now paying the price of the loss of talent through redundancies made during the recession years – meaning today that competition for fresh talent is intense.
Moore states: “Recruitment is still very challenging – for skilled and experienced candidates it’s almost a free market, there are lots of opportunities. Another factor is that we’re starting to see consultants retire and leave the industry altogether, but we still need to grow and so need lots of new staff. This all makes recruitment a lot more difficult than its was before the recession.”
Golder concurs on the present difficulties. Business unit lead for site characterisation and remediation Robert Noden says: “Recruitment can be tough, finding the right people is difficult, especially at an intermediate and senior level. However we have good staff retention which makes this easier.
“We have entered a phase of focused growth and have recruited two new employees through our targeted graduate recruitment scheme just in the past week, bringing our specialist SCR team to approximately 45 staff.”
Thomas from RSK also agrees that it can be very difficult to fill senior position vacancies, stating: “The challenge we have is that there isn’t the right number of candidates available with the right skills. People left during the recession and firms took on less graduates but now we see the shortage of staff with three to five years experience.
“And once we have recruited and trained our own graduates, because of the skills shortage across the industry we’re then faced with the challenges of staff retention.”
WSP’s solution has been to go on the offensive with an tactical recruitment strategy. “We have stepped forward and promoted ourself in the marketplace by showcasing key projects we are involved in to attract the best people,” explains Moore. “We are starting to see some evidence it is working and are keen to continue.”
This year saw the launch of a new qualification for contaminated land management professionals. The National Quality Mark Scheme (NQMS) should help further improve the standards of work and quality of submissions under the various regulatory regimes – including planning applications – relating to previously used land. It will provide visible identification of documents that have been checked by suitably qualified and experienced persons (SQPs) prior to submission.
For candidates to be recognised as an SQP they must possess a recognised and assessed level of experience and knowledge. Persons already registered under the established specialist in land condition (SiLC) scheme are able to qualify as an SQP by undertaking a conversion course.
When asked about the impact of the scheme on professional standards, RSK’s Thomas comments: “I myself am an SQP so clearly support it, about 8% of our contaminated land staff have taken the SiLC conversion course. I think overall the NQMS is a positive scheme – we have clients asking about it already although to date we haven’t put project deliverables through the scheme.”
WSP’s Andy Moore is also an SQP. He says: “I think it’s important the industry steps up at a time when regulations are changing. NQMS is based on the principles of ensuring consistent quality work for clients and I’m 100% behind it. Hopefully it will mean regulation can concentrate on where problems really are. I don’t want to see regulation replaced – I want to see it work alongside the scheme.”
Overall he believes “it’s very encouraging to see the industry upscaling and ensuring professional qualifications are in place”.
Cherry’s opinion of the scheme is a little more reserved. He cautions: “I’m a big believer in driving quality in the industry, to make sure we give clients the greatest possible advice. My only concern is that the scheme is based on providing assurance the work has followed guideline principles and ensuring reports are reviewed and approved with a quality stamp. As such I strongly believe there should also be an emphasis on bringing out something similar to a UCAS accreditation for labs. As consultants we can follow procedure for assessment but if the data is wrong then everything else falls.”
At the same time, he says that OHES is looking into it and “if we do, it will be something we do on top of our standard practice as our emphasis has always been on putting the right qualified people to do the work in accordance with a solid procedure.”
Golder’s Noden remains more sceptical, having seen similar qualifications drop off in the past due to a lack of demand. He states: “It is something we are keeping an eye on; however, at this time we are not seeing the client demand. All clients expect high quality; for example, we provide suitably qualified and experienced people to the nuclear sector. We also have qualified SiLCs and are looking to increase the number of these in our organisation. So we have everything in place to achieve the qualification if and when the time is right.”
Thomas hopes the scheme will have a long-term positive impact on the sector, including she believes “the streamlining of the planning process, as some of the simpler sites could go through the process a lot more quickly, benefiting developers”.
“It will ensure that submissions will have had a level of scrutiny over and above a typical technical review, so authorities will have more confidence in the report. What’s more hopeful is that it will improve quality standards across the industry as it becomes the norm rather than a more robust level of site assessment,” she concludes.
Part II of this special Market Insight, coming shortly, will focus on the potentially destabilising influence of Brexit and the domestic political scene as many firms are increasingly looking to exploit international contaminated land market opportunities
This article has been republished and first appeared at https://environment-analyst.com/55824/market-insight-trends-in-uk-contaminated-land-consulting-part-i.