One irony is that layoffs may make some firms less competitive. “As the recession lengthens, many firms will lay off younger, less experienced people in favor of experienced top performers,” says Bell of SGH. This strategy will result in a staff that is, from an overhead standpoint, top-heavy and potentially less competitive in bidding work, he says.

The layoffs also have depressed salaries. “I’ve seen a lot of really good high-priced talent become really good mid-priced talent overnight,” says Hand. He says there are few good people available with transmission and distribution experience. However, his firm has been hiring people with environmental experience to work on impact assessments for transmission lines, Hand says.

For many firms that have personnel needs, this is a prime market for hiring talent. “We are making select hirings, not to address workload but to improve capabilities,” says Harrison. He says designers with experience in building information modeling software such as Revit are in demand. Simpson Gumpertz & Heger is looking at the high-speed-rail market, having hired a top person to direct strategy, says CEO Bell.

How Low Can You Go?

The level of competition continues to ramp up, but many designers are finding prices that are untenable. HDR’s Bell says he was part of a design-build competition in which the second- and third-place teams’ bids were only a couple of percentage points apart, but the winning bid was 40% lower. He says that it is hard for owners to say no to that kind of price, but it puts the project at risk. “We are in the business of architecture and engineering to make a profit, not just to survive,” Bell adds.

Cannon’s Miller agrees there is more pressure on fees. “In the past, we saw most projects awarded with little regard to fees. Now, owners want to see fees with submittals,” he says. But SGH’s Bell warns clients against accepting bids based solely on price. “Sometimes a bargain isn’t such a bargain after all,” he says.

Competition getting more intense, and the process itself is becoming lengthier and more cumbersome. “It used to be a three-step process: proposal, interview, then contract. Now it seems like a 20-step process, with clients going back and forth with the various bidders,” says Kessler.

Another concern is that, given the difficult local economies around the country, there is more pressure to procure locally. “We have had two projects we were selected for, only to have the local governments reject the selection in favor of a local firm,” says Kessler. This debacle has resulted in design firms lobbying local governments to get the decisions changed, she says.

Designers are concerned the increased emphasis on price by owners may come back to haunt them in the future. “Engineering and construction is a relationship business,” says Giorgio. In good times, owners see the benefits of establishing long-term relationships with design firms, guaranteeing them a set price and level of service. But, he says, some owners now are looking to renegotiate or drop these relationships in a quest to cut costs. “I don’t know if that’s good for business,” says Giorgio. “Design firms will remember that when the market comes back.”

Issues related to federal procurement may be coming. “There is a bill [S. 2989] in the Senate that would require all federal agencies to examine every project over $2 million to look for ways to break it up into smaller elements to benefit small businesses,” says Bill Siegel, CEO of the Kleinfelder Group. This would roll back 20 years of federal procurement policy, cost the government more money and hurt larger firms, he says. The Design Professionals Coalition, a Bethesda, Md.-based organization of large engineering firms, is fighting this bill, Siegel says.

Other People’s Money

As more local agencies find themselves cash-strapped, they are showing increased interest in alternative funding sources. Public-private partnerships helping to fund projects is one answer. “Internationally, the driving force...