Tight credit markets have not just affected the buildings market. “The capital market is still having an impact, with clients trying to squeeze value out of existing infrastructure in the water and energy markets,” says Rodger Smith, president of Enterprise Management Solutions, a unit of Black & Veatch. He says the bond market continues to be constrained, limiting opportunities for firms that rely on financing for capital programs. “So clients’ focus is on services—how to get more bang for their buck,” he says.

Uncertainty

Smith has a further concern. “The [Obama] administration has begun to press for capital market regulation,” he says. This move may cause investors and financial institutions to be more cautious about lending on projects until the nature and scope of the proposed regulations are issued, Smith says.

“Clients find it very hard to do strategic planning in such an environment and are putting off capital spending until things gel a little more,” says Graves.

“There’s no question a lot of administration action has been stalled due to the health-care debate,” says George Pierson, CEO of Parsons Brinckerhoff. He says owners will get a better sense of the administration’s regulatory priorities now that the health-care debate is over.

Some design firms hope the passage of the health-care bill will free Washington to concentrate on the economy. “The President got his win on health care and now has the opportunity to come back to creating jobs,” says Michael Della Rocca, president of Halcrow North America. “Any improvement in the economy will help the industry.”

Another uncertainty for owners and design firms concerns carbon regulation. “Cap-and-trade is a major concern in industry,” says Smith. “I am not certain anything will happen, but it does raise concerns among clients about how it will impact their business.” Smith says that, in the wake of the contentious congressional debate over health care, Congress may not be in the mood for another controversial piece of legislation.

KBR’s Utt is concerned, as well. “We worked through the regulation of sulfur, but the regulation of CO₂ could be a much bigger problem for our clients,” he says. Utt does not know what direction Congress will take on the carbon debate.

Consolidation

It is not news that the largest design firms are continuing their acquisition spree. This development can be seen from the 14 firms that disappeared from this year’s Top 500 list because of acquisition or merger. One major transaction was the purchase of Malcolm Pirnie by Arcadis. “We have been taking [the acquisition] slowly to make sure what emerges is a true integration,” says Dennis Kamber, senior vice president of global water management for Arcadis.

But the largest recent move was Balfour Beatty’s purchase of Parsons Brinckerhoff. “This was more about the acquisition of a whole new capability by Balfour Beatty than a consolidation of two firms,” says George Pierson, CEO of PB. Balfour Beatty is not a “serial acquirer” but a strategic one, he says, noting it has kept all the commitments made before the deal.

Jacobs continues to be in the market for acquisitions, having added Norcross, Ga.-based Jordan Jones & Goulding to its arsenal last year. Martin says it will focus on acquiring small to midsize firms to grow in local markets. “It is...