Circle radius = sqrt(revenue/10)

The short answer is, they make a lot of money. It’s going to take a bit to show you how we figured that out. Welcome to the first of many blog posts by Data Cornerstone. The underlying goal of this company is to combine and carve up large, cumbersome, and disparate sources of data into bite size chunks. In time we will acquire, develop and make use of new and newly interesting stores of data. For now we will take a look at more commonly available data to show you why we think Kansas City is interesting and what we are all about in the process.

We’re going to start by looking at the Engineering News-Record (ENR) Top 500 list. An understandable first reaction when one looks at the ENR Top 500 is “Wow, look at how far off the meter those top 8 entries are?”

Top 15 ENR 500 Firms by Revenue

8 out of 500 is an impressively small number of firms for the lead they have on their competition. Collectively the top 8 companies are currently responsible for nearly 40% of the annual revenue on the entire list in 2013 (roughly $35 out of $90 billion). It is a wonder that they have any competition at all. Many would say they are in a class unto themselves.

The ENR Top 500 is one representation of the Architecture, Engineering, and Construction Industry. If we stop there we get a taste for the AEC industry that is overwhelmed by a few powerful but ultimately uninteresting flavors. The headline probably clued you in that there is something more interesting hiding in this data.

When we begin a data analysis project, it is not all that different from cooking. We frequently have to “prune” the data and pull out dirty/unusable bits that might spoil the results. Anyone who has cooked a potato knows you have to peel it, chop it, boil it, and possibly even mash it to make it edible. Such is the process of data analysis which is what Data Cornerstone is all about.

We could start simply by removing the top 8 entries and carrying on. It would be completely valid even from a statistical perspective. These entries are almost definitely what you might call outliers. It’s statistically valid as long as we don’t pretend to represent the entire industry from that point forward (even now, we’re only looking at 500 firms). What we are now considering is a subset, one that will hopefully become more interesting.

I am going to suggest we take one more “pruning” step before we move on. The ENR Top 500 is composed of what is actually a large variety of companies. Ones we may not even be interested in. Architects, Engineers, Environmentals, Geotechnical Engineers, Landscape Architects, Planners and “Other” comprise the entire list of options. A number of hybrids also occupy the list, as in “AEP” (Architect, Engineer, Planner) or “EAC” (Engineer, Architect, Contractor) indicating that the annual revenue at these companies comes from a variety of sources that we may not be interested in.

For that reason I am going to suggest for the intended audience that we also filter out any entries that do not have an “A” associated with their “type”. As an example, we will filter out Geotechnical Engineers but leave in Engineer/Architect/Contractor types. The assumption here is that we are primarily interested in Architects or related firms who might be interested in hiring Consultants and Engineers.

Now that we’ve trimmed the fat from our data, we see that we still have a number of “outliers” but possibly fewer than we had before.

Top 10 ENR 500 Firms
(Offering architecture services)

At this point the differences in revenue are extremely exaggerated. You can almost tell without the numbers that CH2M HILL is twice as big as Parsons Brinckerhoff. If what we’re looking for is a point where we can filter out big companies, we might want to look further down around the $1 billion level.

In this case, it doesn’t matter too much where we cut certain outliers as long as we have a good reason. This one has a good ring to it. We can now follow any results we come up with by saying “for architecture firms with less than $1 billion in revenue”.

Top 15 ENR 500 Firms below $1B
(Offering architecture services)

At this point I’m going to pause and offer an explanation of how this started and where it’s going. I initially wanted to give a taste of what data analysis is like. Even if we started out with a specific question, we don’t want to be closed minded about other interesting things we find along the way. It’s like stepping into your kitchen knowing that you want to cook a steak without knowing exactly how you’re going to make it or what you’ll have on the side

Before I came up with this post I wondered: “Are there any locations specific to this industry (excluding the major cities) that have an interesting amount of architectural revenue?” The answer as it so conveniently happens is “yes”. We don’t even have to filter out the major cities to find it.

Total Architectural Revenue by City
Circle radius = sqrt(revenue/10)

Right there smack in the middle of the US is big ole Kansas City with over $2.2 billion in revenue. They actually have the highest total revenue of all cities represented in the ENR Top 500 when our filters are applied. To drive the point home I will say it another way; from the ENR 500, Kansas City has more total revenue from companies that practice architecture earning less than $1B than New York, San Francisco, Los Angeles, Chicago, and Philadelphia.

“Ah ha!” you might say “Could this be a sign of another outlier?” Sure. It all depends on what we’re trying to find out. When we look back at the underlying entries for KC we see that there are 5 companies who make up the list.

Firm	Type	2012 Rev. ($MM)
BURNS & MCDONNELL	EAC	$933
HNTB COS.	EA	$912
TRANSYSTEMS CORP.	EA	$226
POPULOUS	A	$84
CRB	EA	$79

We might recognize the top two in the table from the results of the filter we applied. We could go even further by filtering them out again and seeing what’s left. While Kansas City is seemingly monopolized by two major firms, it should still be a point of interest. Intuitively many people expect New York and/or San Francisco to stand out. Perhaps this is based on the quantity of firms that we think practice architecture in those cities. Perhaps this even points out deficiencies in using the ENR 500 as a dataset which is worthy of further discussion elsewhere.

I’m going to stop here because I think it’s a good note to end on. We filtered out the companies that weren’t relevant along with the bigger companies on the list. Lastly we mapped the remaining results to see if we could find anything of geographic interest.

I wouldn’t advise anyone to open up an office in KC if you did not have one there already. These results are unfortunately tied to the headquarters of companies that have offices in multiple locations. The data also includes international revenue at these companies which makes it even more questionable. If only we had better data!

Despite all that, you still might want to think twice about the companies that show up on the list above and how your organization is or isn’t serving them. I hope you found this interesting. The detailed lists for New York and San Francisco (the next two respectively on the list of top cities) are below for comparison.

ENR Top 500, Architects in New York City less than $1B