Use of consulting engineering services
The direct use of consulting engineering services in the EU28 Member States is estimated using Eurostat's Use Table at Basic Prices.
Use of CE services
NACE is the acronym used to designate the various statistical classifications of economic activities developed since 1970 in the European Union. NACE provides the framework for collecting and presenting a large range of statistical data according to economic activity. The NACE Revision 2 of 2008 is reflected in the international 2008 System of National Accounts (SNA08) and its use is mandatory within the EU statistical system.
Integrated with the NACE classification of economic activities is the Classification of Products by Activity (CPA), last revised in 2008. The NACE-CPA structure means that every good or service produced in the market can be assigned to a NACE activity.
Investment in services according to SNA08 can be separated into 'direct' and 'indirect' investment, where the indirect investment is the value of the services that are embodied in a product or service but are not captured by national accounts (see note).
We discuss here the direct investment in consulting engineering services. The consulting engineering industry is defined as the industry that supplies:
- M71 services
- less some specific M71 services
- plus some specific services that are classified under other CPA divisions.
The M71 (Architectural & engineering service) CPA division has the necessary one-to-one correspondence with the NACE Revision 2 M71 (Architectural & engineering activities) division. It is subdivided as follows:
- M71: Architectural & engineering services; technical testing & analysis services
- 71.1: Architectural & engineering services & related technical consulting services
- 71.11: Architectural services
- 71.12: Engineering services & related technical consulting services
- 71.2: Technical testing & analysis
- 71.20:Technical testing & analysis
- 71.1: Architectural & engineering services & related technical consulting services
Adjustments to service classifications that are needed in order to estimate the activity of the consulting engineering industry are:
- M71: remove M71.10 (Architecture services), M71.20 (Technical testing and analysis) and some M71.12.3 (Geological, geophysical & related prospecting and consulting services)
- Add activities relating to consulting engineering in the following activitity classifications:
- M72.19 (Other research and experimental development on natural sciences & engineering services)
- B09.90 (Support services for other mining and quarrying)
- M74.10 (Specialised design services)
- M74.20 (Photographic services)
- M74.90 (Other professional, scientific & technical services)
- N81.30 (Landscape service services)
The specific areas of consulting engineering activity in each of these additional classifications are:
- M72.19: CPA 72.19.29 (Other research and experimental development services in engineering & technology, except biotechnology) related to consulting engineering.
- M09.90: CPA 09.90.1 (Support services to other mining and quarrying) - test drilling in connection with mining; exploration services in connection with mining.
- M74.10: CPA 74.10.19 (Other specialised design services) - graphic design services.
- M74.20: CPA 74.20.2 (Specialised photography services) - arial photography
- M74.90: CPA 74.90 (Consulting) includes CPA 74.90.13 (Environmental consulting services), CPA 74.90.15 (Security consulting services) & CPA 74.90.19 (Other scientific and technical consulting services) - various consulting services, 74.90.20 (Other professional, technical & business services) - specialist advisory services (detailed breakdown of each classification is available; in French).
- N81.30: CPA 81.30.10 (Landscape services) - planting, care & maintenance services; minor incidental design & construction services.
The following percentages of turnover are estimated on order to estimate the demand for the various types of consulting engineering services in the 27 European countries that were surveyed for the 2019 update of the FIDIC-EFCA Survey (see EFCA 2019 conference presentation):
M74.10 (Specialised design services): in the European Union, 22% of employed professional designers work in the environment and interior design sector (as opposed to graphic and communication design, product and industrial design, illustration design and fashion and textile design) PDF. Of those in the environment and interior design sector some 20% (or 4% of employed designers) work in architecture and engineering design.
M74.90 (consulting services): this sector typically involves technical studies involving 8% of M74.90 turnover PDF
N81.30 (Landscape service activities): represents 16% of N80-82 turnover of which 50% is for large firms . Assuming activity is split equally between andscape service activities include planting, care and maintenance of public and private parks and gardens and greenery for infrastructure such as nature-based solutions, some 4% of activity creates a demand for consulting engineering services.
The table below summarises the factors by which the domestic use of each activity in the table are reduced by to obtain the use of consulting engineering services. The domestic use for each activity is obtained by subtracting from the total use in Basic Prices from Supply Tables:
- exports in Purchaser Prices from Supply Tables converted to Basic Prices, and
- use by the economic activity in Purchaser Prices from Supply Tables converted to Basic Prices.
The removal of use by the economic activity itself is necessary to avoid double counting where most of the intermediate consumption of a product is by an activity owing to subcontracting and the like Goodridge et al., 2014.
|Product (CPA)||Activity (NACE Rev. 2)||Average use factor||Product|
|M71.12: Architecture & engineering||M71: Architecture & engineering; testing||Engineering: 100% of M71.12 share of M71 turnover.||72%|
|M71.19: R&D||M72: R&D||R&D:100% of business share of total R&D expenditure in relevant sectors times M72.19 share of M72 turnover.||5.4%|
|B09.09: Test drilling||B: Mining||Test drilling: 20% of share of B09.90 test drilling turnover.||1.4%|
|M74.10: Specialised design||M74-M75: Other professional||Design: 4% of share of M74.10 + M74.90 in M74+M75 turnover.||4.5%|
|M74.20: Specialised photography||M74-M75: Other professional||Specialised photography services: small.||small|
|M74.90: Professional activities||M74-M75: Other professional||Consulting: 8% of share of M74.10 + M74.90 in M74+M75 turnover.||4.5%|
|N81.30: Landscape services||N80-N82: Security, service & landscape||Landscaping: 4% of M81.3 share of M80-M82 turnover.||0.3%|
Table 1: Average values of the use factors that are used to reduce the total domestic use of the various types of services of which consulting engineering services form a part. For example, the total domestic use of M71 is reduced by an average factor of 0.72 in order to obtain the domestic use of engineering services supplied by the consulting engineering industry in a country. The factor of 0.72 varies for each county and is obtained from turnover given for M71 and M71.12 in Eurostat's Structural Business Statistics database. The average values in the table are for the 27 European countries that were surveyed for the 2019 update of the FIDIC-EFCA Survey (see EFCA 2019 conference presentation).
A simple way to evaluate the evolution of the use of the various types of consulting services is to calaculate the year-on-year growth rate of each type of service and to normalise these growth rates. This is done in the Fig. 1 which gives the growth rates for each type of service in 2011 to 2015 normalised to the growth rate in 2010. The growth rates are the average growth rates for the 27 European countries that were surveyed for the 2019 update of the FIDIC-EFCA Survey (see EFCA 2019 conference presentation).
Fig. 1: Normalised growth rates for the use of the various types of consulting engineering services listed in the Table 1 for the FIDIC-EFCA Survey's 2019 update covering 27 European countries.
For the 2019 survey update's 27 European countries, Fig. 1 shows that the most rapid increase in consulting engineering services in the most recent years for which use data are available are for services related to specialised design and consulting (classified under CPA M74-M75) and those related to R&D (classified under CPA M72).
Services classified under CPA M71 (engineering and related technical consultancy) regained the 2010-11 growth rate in 2010 whereas drilling and landscaping type services classified under CPA B and CPA N80-N82 saw a sharp decrease in 2015.
The growth rate data for the various types of consulting engineering services summarised above suggest that the use of consulting engineering services is increasing significantly in the areas of consulting and specialised design and R&D.
While thae aount spent on CE services used for R&D are 4 -5 larger for the amount spent on specialised design and consulting, the note will mainly consider the implications of the growing use of services for specialised design and consulting beacues a) changes in the specialised design and consulting are reater, abd b) it is exteemly difficiult to identify specific R&D activities that may be driving an increase in the use of CE services.
There is also a more fundamental question namely should some of the specialised design and consulting services classified under M74 (Other professional, scientific & technical activities) that are supplied by the consulting engineering industry be classified under M71 (Engineering activities & related technical consultancy).
This issue is analysed and discussed separately in view of a request by Eurostat to propose changes to NACE Rev. 2 classifications by 30 June 2019 (see the text of request without its confidential information).
Updated 19 May 2019