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Max Salary $90k!

Max Salary $90k!

Quality, Consequences and the Construction Industrial Complex (part 230).

To survive and grow AEC firms are evolving into large transnational organizations and taking advantage of labour cost arbitrage. One element of this evolution is that a maximum salary ceiling of ~ $90k is emerging for engineers.

I am seeing this play out in several large AEC firms I interact with. The new AEC business model plays like this:

  1. Consolidate SME’s into large AEC firms and drive cost efficiencies by reducing duplications.
  2. Vertically integrate AEC service offerings with project management plus quantity surveying as apex services with the key business development focus. In this model Architectural and Engineering services are secondary business segments.
  3. Focus on very large property and governmental infrastructure projects to minimize the competition pool.
  4. Off shore standard design tasks and drawing production to satellite offices in low cost locations e.g. Eastern Europe, Asia and India.
  5. Reduce offices in high cost locations to senior, supervisory staff responsible for project and client management.

In manufacturing, scale was achieved via manual labour until automation and off shoring jobs kicked in. Scale for AEC firms manifests in the form of technical labour. People and borrowed money are the tools for scale. Labour costs are the key cost input and quality risk to be managed.

What does this mean if you are employed as an engineer in a “Western” top tier city location such as London, New York, Toronto etc.? IMHO, it will impact in two ways:

Senior Engineer

If you are senior with good engineering plus project management plus client / BD skills you are safe but your maximum earning potential will be ~ $90-$100K. You will manage multiple projects and internal teams to deliver projects by the actions of others. Matrix project management will become the norm.

~ $90-$100K is a great salary but your 4 year degree plus 5 years training may not ensure a comfortable salary and lifestyle in the future. Market forces do not care about your personal costs.

Junior & Intermediate Engineers

This is a hard place to be. Getting a start, then a mentor to train you will be difficult as senior engineers are overloaded and people that actually do design work are remote. Also I believe automation and standardization will increasingly impact the AEC work space further reducing mentor and training face time.

Day to day engineering design will become a cubical “puppy mill” job. When the cost of this job locally reaches a certain level it will be off shored. Short term this will flatter the financial bottom line but long term it will create vast transfer of wealth and skills.

To manage these realities I believe there needs to be an industry response and a personal response.

Industry Response

Recognize that skilled people, technology and skill retention matter to local and national economies in the long run. Training and technology development costs need to be “pooled” and paid for by industry and government to provide:

  1. Part time, post graduation AEC training services free of charge to students. Ideally this training would be delivered by actual veteran practitioners and not full time academics.

Match junior & intermediate engineers & technicians with volunteer senior mentors. Maybe there could be an app for this? Anyone out there want to try this with me?

Personal Response

To misquote Ben Shapiro, “market forces do not care about your feelings or personal circumstances”. It is what is, take ownership of your situation and seek training and mentors. Understand that a basic 4 year technical education is just the beginning of your learning and adjacent skills will need to be acquired to adapt and thrive.

It is an exciting time to be in the property business but change is coming and deep personal ownership of your career and personal development will be vital to success.

BTW: the WSP / AECOM merger is quietly moving along ( https://www.bloomberg.com/news/articles/2020-03-04/wsp-global-is-said-to-progress-in-discussions-to-acquire-aecom ).

#extremeownership # disciplineequalsfreedom #WSP #AECOM

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Twitter: @BLDWhisperer

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#228 – Self Education

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#Cx #nomad #Cxnomad #RICS #property #ACG #edificecomplexpodcast
#ProjectManagement #makingbuildingswork #podcast

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