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The Clarity Report: Architecture & Engineering Industry

Although the last five years have been a financial roller coaster for many A&E firms, dozens of financial indicators show the industry is improving slowly but steadily. Will we continue in a slow recovery pattern for several more years, or does the next boom begin now?

Looking at Today: KPIs

A new report by Deltek, The Architecture & Engineering Industry Study, shows improving financial performance among A&E firms as overall profitability steadily increased in a cautiously optimistic economy.

Key data points:

  • After reaching a decade low in 2009 at 8.4%, operating profit rates continued to rise steadily to 10.1% last year.
  • Utilization rose in 2012 from 58.3% to 59.9%, and now is up over five percentage points since bottoming out two years ago.
  • Overhead rates dropped by more than 10 percentage points last year from their peak in 2011.
  • Net revenue per employee finally began to make up lost ground in 2012, rising to $121,902.

What’s Next for A&E Firms?

2013 Growth projections are slightly higher than the actual 2012 growth rate, showing continued cautious optimism.  

Highlights:

  • The highest market growth expectations are in the private sector.
  • Nearly three quarters of participants say “green” projects are a source of work for them. A third of those, led by architecture firms, call it a “major” source.
  • The percentage of firms who said international work would be very important or critical has declined each year since 2009.
  • Nearly 80% of participants said they expect to make technology investments in the near future, with a little over 60% planning to spend on information management, and nearly half in design and documentation.

The report includes 2012 data on the most important operating metrics for A&E firms, including:

  • Net labor multiplier
  • Utilization rate
  • Overhead rate
  • Operating Profit rate

For more information and to download the report, visit Deltek’s website.

 

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