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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.
- 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.