DiCicco, Gulman & Company LLP (DGC) of Woburn, Mass., a CPA and business consulting firm specializing in the architecture and engineering (A&E) industry, has released initial findings of its 2011 Architectural Study. The annual survey benchmarks financial performance based on input from over 30 prominent firms in the Greater Boston marketplace. The study contains some of the most comprehensive, historical data available for New England firms.
This year’s study is evidence that the A&E industry is beginning to rebound. On average, firms saw approximately 7.5% of their net fees drop to the bottom line compared to last year when the average firm realized a meager 0.4% of net fees, with half of the firms operating at a loss. The DGC 2011 Architectural Study reports that the average utilization of A&E firms for 2010 increased to 61.5% after dropping to 58.9% in 2009, the lowest chargeability rate on record. The direct labor billing multiple is a healthy 3.23, however, this may be artificially high when compared to historical trends because of the impact of pay cuts. Average total hourly wage rates were relatively flat in 2010 compared to 2009.
In addition, project pricing continues to be a challenge as some firms have sought to “buy” work with lower rates. There was a slight decrease in average billing rates during 2010. It will be difficult for firms to return to historical profit levels until we see more improvement in the utilization rate, which is still low at 61.5%. As a result, firms have continued to run very lean and this will likely continue until the industry sees more consistent improvement.
“All in all, it’s encouraging,” said David M. Sullivan, the partner in charge of the A&E group at DGC. “Recovery may be slow, but we believe the worst is behind us.”
"Going forward, firms will need to evaluate their strategies,” adds Chad DaGraca, a principal in the A&E group at DGC. “They will need to think about their business model, the types of markets they are in, and how they can leverage their talent and resources to give them a competitive edge.”
The DGC Architectural Study highlights the firm’s expertise and in-depth knowledge of the architecture and engineering industries. DGC experts analyze financial data from prominent firms in the Greater Boston region, focusing on operational performance metrics and identifying emerging trends. Elements of the study will be discussed at DGC’s upcoming A&E Summit on June 9 at the Westin Waltham. For details, visit www.dgccpa.com/aesummit.
This year’s study is evidence that the A&E industry is beginning to rebound. On average, firms saw approximately 7.5% of their net fees drop to the bottom line compared to last year when the average firm realized a meager 0.4% of net fees, with half of the firms operating at a loss. The DGC 2011 Architectural Study reports that the average utilization of A&E firms for 2010 increased to 61.5% after dropping to 58.9% in 2009, the lowest chargeability rate on record. The direct labor billing multiple is a healthy 3.23, however, this may be artificially high when compared to historical trends because of the impact of pay cuts. Average total hourly wage rates were relatively flat in 2010 compared to 2009.
In addition, project pricing continues to be a challenge as some firms have sought to “buy” work with lower rates. There was a slight decrease in average billing rates during 2010. It will be difficult for firms to return to historical profit levels until we see more improvement in the utilization rate, which is still low at 61.5%. As a result, firms have continued to run very lean and this will likely continue until the industry sees more consistent improvement.
“All in all, it’s encouraging,” said David M. Sullivan, the partner in charge of the A&E group at DGC. “Recovery may be slow, but we believe the worst is behind us.”
"Going forward, firms will need to evaluate their strategies,” adds Chad DaGraca, a principal in the A&E group at DGC. “They will need to think about their business model, the types of markets they are in, and how they can leverage their talent and resources to give them a competitive edge.”
The DGC Architectural Study highlights the firm’s expertise and in-depth knowledge of the architecture and engineering industries. DGC experts analyze financial data from prominent firms in the Greater Boston region, focusing on operational performance metrics and identifying emerging trends. Elements of the study will be discussed at DGC’s upcoming A&E Summit on June 9 at the Westin Waltham. For details, visit www.dgccpa.com/aesummit.
