A higher profile for contaminated land
It is boom time for contaminated land consultants, with more work coming in than ever before thanks to a potent combination of regulatory and economic drivers. Although an expanding market is very welcome it also poses challenges. A major concern for consultancies and contractors, as well as their clients, is the shortage of appropriately qualified staff. Erin Gill takes a closer look at the key issues facing those involved in this increasingly dynamic marketplace.
Ask just about any established consultant in the contaminated land field and you will hear the same thing. There is more and more work coming in and despite the usual uncertainties produced by legal and regulatory grey areas, there remains a strong feeling that the sector will continue to grow quickly for at least a few years.
Marcus Ford, head of environmental consulting at URS, puts it this way: "I think the sector has a lot of growth in it. It will reach a critical point eventually, when the number of really nasty sites to be cleaned up has diminished, but there's a lot of legacy that will take many years, if not decades, to sort out. My sense is that there's going to be five years of a lot of activity, potentially up to ten years, after which we'll see a significant decrease."
Meanwhile, Mary Harris, land and water quality business director at Casella Consulting, admits that her team is pleasantly "overwhelmed with work", a sentiment echoed by several other consultancies, including smaller ones such as Edinburgh-based IKM Consulting, which recently won its biggest-ever contaminated land contract. "We're already as busy as we ever have been and now we've won this new contract," says IKM director Alistair Kean. Although Mr Kean believes the sector "won't grow like this forever" no one is yet piping up to claim that a reduction in the volume of contaminated land work is on the way.
While there is no denying that the sector is on the up, it is not necessarily true that all of this extra work will translate directly into hefty increases in the bottom lines of the major multidisciplinary consultancies, warns Judith Lowe, an independent consultant and one of the sector's most respected voices. Some of the growth being reported may be taking work away from more generalist site development teams within consultancies.
"Clients are realising that they need someone with contaminated land expertise, not a generalist, whereas previously, if a big consultancy won a quarter of a million pound project, its small contaminated land team got maybe 30,000 worth of that project," says Ms Lowe. "Now, more clients are realising that 150,000 of that needs to be spent on understanding the contaminated land implications of the project. And that may mean that there is less spent on standard work such as producing a development design. The workload for the consultancy as a whole isn't necessarily increasing, but is shifting internally."
There is, however, one group within the contaminated land sector that has experienced a recent dip in work, albeit a temporary one, and that is the remediation contracting field. In 2004, many remediation contractors went through a boom and bust cycle created by the EU landfill Directive and its ban on the UK's long-standing practice of disposing of hazardous waste in non-hazardous landfills. In the run-up to the ban, which came into effect on 16 July 2004, there was a frenzy of contaminated soil excavation as site owners got rid of material while it was still cheap to do so. This was followed by a few quiet months during which site owners weighed up their remediation options under the new rules.
But as 2005 kicks off all signs suggest that it should be a busy year for contractors, especially in the first half when once again site owners will be racing to landfill soils before the next phase of the landfill Directive kicks in. This will see introduction of waste acceptance criteria (WAC), which aim to force waste producers to reduce the hazardous properties of the waste they landfill through pre-treatment of material. The problem is that the detailed ins and outs of WAC standards are still a matter for debate between regulators and industry. When the standards come into force, in July this year, they are likely to prohibit the landfilling of some soils, particularly those heavily contaminated with hydrocarbons.
Despite the market volatility, there remains optimism among remediation contractors. Churngold Remediation expected a drop-off in business during the second half of 2004. "The industry got ahead of the game in terms of dumping stuff before the ban came in and, yes, there was a slowdown afterwards," admits managing director Craig Sillars. "It didn't catch us by surprise - we knew 2004 would be odd. But because of it, I suspect that we won't have turned over any more in 2004 than the year before, but I think there will be a significant step up during 2005."
The widespread optimism in the contaminated land community is all the more noteworthy because it is being voiced by firms with very different client bases and specialisms. The fact that consultancies of all shapes and sizes are seeing their contaminated land work swell suggests that several drivers are working in combination to create a healthy variety of work rather than simply a proliferation of the same type of jobs.
Not all consultants agree on which are the most important forces at work. Golder Associates' commercial director, Mike Patterson, believes the government's brownfield redevelopment and regeneration agenda is the most significant driver, and that it will become an even more dominant factor as the Thames Gateway initiative gets going. Mr Patterson acknowledges that Part IIA of the Environmental Protection Act 1990 is also a driver, but not a major one. "There is pressure on local authorities to activate their Part IIA inspection strategies, but that is not as significant as the regeneration agenda," he says.
Other consultancies ascribe greater importance to the Part IIA contaminated land regime, arguing that although its direct effects are modest the indirect impact has been steadily growing. "Beneath the surface there's a lot more activity going on in response to Part IIA being there and being active," says Jonathan Steeds, technical director for Atkins Environment's contaminated land solutions business. "Because Part IIA is in place the brownfield site holders are starting to look more seriously at the issue and are spending some money. People are starting to do things in advance of being caught in that formal regulatory process. That was always the way Part IIA was intended to work, as a regulatory threat."
In addition to working with clients on voluntary investigation and remediation projects that are specifically designed to steer clear of Part IIA determination, Atkins is also one of a relatively small group of consultancies that dominate the Part IIA-specific market. "We're finding that Part IIA is making a real difference to our volume of work - that is, formal Part IIA work for regulators on sites they may want to determine or on sites that have been determined and where there is further work to be done," says Mr Steeds.
Another company that regularly works on Part IIA projects for local authorities and the Environment Agency is Casella. "We're doing a lot of specific Part IIA work because one of our strengths is in understanding the regulatory regime and the precision it requires," says Mary Harris.
Consultancies that primarily work with property developers tend to see the brownfield redevelopment and regeneration agenda as the most important reason for the upswing in contaminated land work, while those that work more with either regulators or corporate clients with industrial landholdings cite the Part IIA regime. It could be argued that both of these drivers demonstrate the effectiveness of government policies - but these policies have also, thus far, had the benefit of coinciding with a stable economy and a relatively strong property market.
Golder's Mike Patterson certainly feels that macro-economic issues are playing a big role in the sector's growth. "If you have a stable economy companies can manage their business risks more effectively - they have more certainty about what they are going to be able to do."
IKM's Alistair Kean, who is also chair of the Environmental Industries Commission's contaminated land working group, also sees the health of the economy as fundamental to the sector's success, arguing more specifically that the commercial property market's recent return to strength is a factor behind recent work.
What about other emerging drivers? Are there even more reasons to be cheerful? One new ingredient in the mix is the operating and financial review (OFR), which all UK-listed companies will soon be required to publish on an annual basis. The OFR is designed to improve corporate transparency by forcing publicly-quoted firms to spell out their assets and liabilities much more clearly. Firms are being encouraged to include information on environmental risks. "Companies are being pushed down the route of quantifying liabilities, including environmental liabilities," says Marcus Ford of URS, adding that this is already creating some work for his team.
Another piece of legislation that continues to create consultancy work is the landfill Directive. As it gradually transforms the UK waste management sector, consultants are being asked to advise clients on both short and long-term remediation strategies. "From a consultant's point of view, uncertainties surrounding the landfill Directive are potential opportunities because clients need someone to give them guidance," admits Atkins' Jonathan Steeds. "That can be and has been shown to be good for business. Although it can be frustrating - when things that were supposed to happen last year are going to happen this year, and so on, it doesn't make it particularly easy for some of our clients. They're trying to manage their businesses and they've got moving goalposts."
A potential source of new work is closely related to Part IIA but may prove significant enough to develop momentum of its own. This is the Office of the Deputy Prime Minister's policy statement on planning and pollution control, PPS23, published in November 2004. An annex dealing with land contamination brings planning guidance up to date with the Part IIA regime. Setting aside the fact that it was a couple of years late in arriving, PPS23 will help many local authority planning departments get to grips with Part IIA and become more systematic in the way they request information from developers about contamination risks.
PPS23 could easily result in a further increase in the amount of documentation brownfield developers will be expected to supply, and in some cases an increase in the number and complexity of invasive site investigations they will have to commission.
To tender or not to tender
With more contaminated land work landing on consultants' desks, it is not surprising to hear that fighting for the next contract isn't the cut-throat affair it would be if jobs were thinner on the ground. Many of the more established consultancies are allowing work to come to them and choosing to tender only for jobs that fit with their company's overall focus or their team's specific set of skills.
Casella is one such firm. "We're doing a lot more work with established clients. We've always had a strong client base and we are currently doing around 60% of our work for repeat clients," says Mary Harris. Although the amount of money a client is willing to pay is of course an issue, Ms Harris also believes that the increasing complexity and diversity of contaminated land work means that companies should think about playing to their strengths when they choose which jobs to pursue.
Casella happily takes on risk assessment and site characterisation work, but "we wouldn't claim to be leaders in remediation. At the moment we would not take on a multi-million pound remediation contract alone. We're not a big engineering consultancy and we're quite happy to be part of a team. Maybe what we're beginning to see is separation in terms of what different companies' expertise is - maybe people need to be a bit more honest about where their expertise begins and ends."
But a contradictory trend is also evident. Some consultancies view the buoyancy of the contaminated land sector as an opportunity to expand. Some of these are large multidisciplinary consultancies that perhaps haven't made contaminated land an important area of their work in the past. Others looking to grow quickly include consultancies with headquarters in other countries and which see the UK as rich pickings.
One such firm is Golder Associates, a Canada-based international consulting outfit. Its UK arm views contaminated land consultancy as one of its three principal areas of work and as of the end of 2004 employed about 160 staff, double the number a mere 18 months earlier. Not all of those employees work exclusively on contaminated land projects, but a significant number do.
Golder also takes a decidedly commercial approach to winning work. Instead of giving the job of finding new business to senior staff with technical expertise in contaminated land - a traditional approach within the sector - the company employs sales-focused staff at senior level. Commercial director Mike Patterson's background illustrates this point. Before joining Golder, he worked as an insurance broker and he sees his current role as solely one of winning work, leaving technical staff to devote their time to project-based tasks.
Expertise in demand
One of the biggest headaches facing contaminated land consultancies and contractors is a shortage of skilled staff. Recruiting and keeping the right people is high on most firms' agenda. "We've been increasing staff numbers to the level we think we need and then we've been finding that the workload has increased further and the gap is continuing to widen," admits Atkins' Jonathan Steeds. "I think it's a reasonably significant business risk for us. There's no real shortage of graduate staff but if you want to get people who have 5-10 years' experience - to some extent - or more importantly 10 years' plus experience, well, there aren't enough of them. And consultancies are busy trying to pinch each other's staff, which isn't good for anyone."
Some consultancies, such as Environmental Resources Management, are regularly cited as convincing high-level staff working for other firms to join them - a recent addition to ERM's team is Phil Crowcroft, who formerly headed up Entec UK's contaminated land business. But ERM's reputation for savvy recruitment isn't a new development, and it is in fact the 'poaching' tactics of several other firms that are currently attracting comment.
Golder admits to being one of the consultancies willing to pay a premium to fill posts. "We are looking to differentiate ourselves in the market and one of the ways we can do that is to always provide the brightest and the best people," explains Golder's Mike Patterson. "We use something like seven recruitment companies and we also use headhunters." He acknowledges that Golder has "annoyed" at least one consultancy by poaching several of its staff.
This all sounds rather tense for what is often seen as an unpretentious corner of the environmental consultancy business where staff from rival firms are often good friends. Could there be another reason for this intense competition for skilled people? Casella's Mary Harris believes that the introduction of a risk-based approach to contaminated land decision-making has increased the complexity of contaminated land work and that this is a factor behind the current scramble for skills.
"There's no doubt that there's been an absolute step change in the way this work is done, in terms of the technical understanding the consultant needs to have and the precision that is required," she explains. "I think that has probably exposed inexperience in some teams and companies are now trying to buy experience. And Part IIA itself is very demanding, so some companies are looking for people with an understanding of the legislation."
The skills gap is not confined to consultancies; contractors are also struggling to find the right staff. For example, Churngold Remediation is increasingly being asked to bid for jobs that require the use of four or five different remediation techniques on one site. This is exactly what Churngold wants since it positions itself as offering a wide range of technologies. But such projects pose a human resources challenge. "The jobs that we're getting in are so complex that they're landing on one or two people's desks and we need to reduce their workload. So the other week we said to ourselves, 'right, who can we poach?' But we can't think of anybody. It's a nice position to be in, in some ways, but it could restrict how much we can grow," says Craig Sillars.
Will soil treatment centres ever be up and running in the UK? The short answer from contaminated land consultants is "we hope so and chances are good."
Independent consultant Judith Lowe believes that a soil treatment plant of some sort - possibly no more than a small temporary one run under a mobile plant licence - will be up and running during 2005. But she agrees with just about everybody in the business that soil treatment plants shouldn't be seen as the be all and end all of remediation in a post-landfill world. For a start, the post-landfill age hasn't really arrived yet and until EU waste acceptance criteria enter into force this July and gate prices at non-hazardous landfills go up, the economics of ex-situ soil treatment may continue to be too uncertain for many players in either the waste management or remediation sectors to take the plunge.
Regulatory hurdles shouldn't be underestimated either. Biffa and Biogenie made a splash last year with their announcement of a joint soil treatment venture, but this was followed by regulatory obstacles rather than the commencement of treatment. There is a long list of tricky issues that regulators and plant operators will have to resolve before soil treatment services become an established remediation option. One is whether the soil recovered by treatment centres will be able to be reused without too many regulatory strings attached. If recovered soil is classed as waste that will make reusing it difficult. So, a concept that was originally viewed by some - mostly uninformed observers on the sidelines - as the future face of remediation is now being seen in a more realistic light.
There is a lot of hope and a certain amount of confidence that soil treatment plants will eventually become a standard remediation option. But there is also firm conviction that other treatment technologies will be equally necessary - thermal desorption being the current favourite.
A question of liability
One problem that is quietly but regularly discussed among contaminated land insiders is professional indemnity (PI) insurance. While consultants' PI has always been important to potential clients, there are signs that consultancies are increasingly uncomfortable with the way clients are insisting on high levels of PI cover accompanied by very high or unlimited limits on liability.
Hugh Mallett, land and water consulting director at Enviros and chairman of the Association of Geotechnical and Geoenvironmental Specialists (AGS), believes that consultancies are regularly allowing their arms to be twisted into offering both excessive levels of PI and liability cover for often quite small contaminated land jobs and are exposing themselves to serious financial risk. He argues that the time has come for consultants to talk about the issue with the lawyers who hammer out contract terms on behalf of site owners.
Atkins' Jonathan Steeds agrees that PI is a problem. "It's quite right that consultants provide a professional level of advice and can back that up with a certain level of financial security, but there needs to be a reasonable balance and I'm not sure that the way things are going it's taking us any closer to one," he says. "There have been a number of instances when it's been obvious that people have come to us because they want a particular form of contract or they want the PI and we have walked awaysometimes it's clear that someone is trying to obtain some sort of risk transfer onto the consultant. We think there's an insurance market out there that you can do that with, rather than us as technical consultants."
The other issue regularly remarked upon behind the scenes is mess-ups. In other words, consultants getting things wrong which forces the client to call in another set of consultants to put things right. It's not unknown for the second consultancy to also fail and for a third to be drafted in. IKM Consulting have waded in a few times after projects have gone wrong and this has led director Alistair Kean to believe that "the big names don't necessarily offer good value". What counts isn't the size of a consultancy but how informed and competent the individuals are who actually work on the project.
Judith Lowe agrees and although she is optimistic that the volume of contaminated land work will continue to grow she believes there is a risk that poor quality advice could eventually threaten the sector's prospects. "Unless consultants make sure that they're on top of things, they will find that clients will do it themselves, [and] grow their own teams," she says. "That happened in the early 1990s, when some of the big industries realised that some of their own staff had got ahead of the consultants they were using." Local authorities and major house builders could be in a similar position in a few years' time unless consultancies demonstrate that their advice is genuinely up to the minute and valuable.
Evidence of sloppy work crops up regularly in the consultancy reports that Casella reviews for public sector regulators dealing with Part IIA issues. "They get the terminology wrong, they don't understand the process, they jump from place to place, they give advice on liability which is questionable," says Mary Harris. Judith Lowe doesn't think consultants should be giving advice to their clients on liability, arguing that it remains such a complex and untested area and that environmental lawyers specialising in the field should be the only port of call.
One such lawyer is Andrew Wiseman, a partner at Trowers Hamlin and chair of the UK Environmental Law Association. He has come across consultants giving advice on liability and admits that it is a concern. "It's perhaps not a widespread problem yet, but when I have come across it consultants have made sweeping generalisations about liability that are usually wrong. When they get it right it seems to be more luck than anything else, and I'm not sure their PI insurers would be happy to know they are advising clients on liability."
One indication that the contaminated land sector is awake and responsive to the need to maintain standards is the steady increase in the number of people working towards specialist in land condition (SiLC) status. Although the number of SiLCs is still modest, totalling about 60 at the end of 2004, there is every indication that the 100-mark will be passed by the end of 2005. The SiLC qualification has a lot of supporters, even if there are as yet few signs that clients are specifically asking for SiLCs to work on projects. Some within the sector hope that as time goes by it will raise the playing field with the contaminated land consultancy market by coming to be seen as a stamp of basic quality assurance.
Given the multidisciplinary nature of contaminated land work, a broad-based qualification like SiLC cannot guarantee that a consultant has the expertise to deal with every problem a project might throw up, but it does identify those who have made the effort to go through a peer review-based assessment.
It is an exciting time for contaminated land consultancy. There are as many - if not more - technical and regulatory challenges facing the sector than ever, but at least there is enough work coming in to make the hurdles worth jumping. No one is willing at this stage to put a number on how much bigger the contaminated land market is compared with five years ago or how much bigger it could be in another five years' time, but optimism is in the air - in a sector that has not recently been known for talking itself up.