Profits are Up for A/E Firms

By Consulting Specifying Engineer Staff August 12, 2005

Architecture, engineering and environmental consulting firm profit levels have reached their highest levels since 2001, a new report shows. Data in ZweigWhite’s 2005 Financial Performance Survey Of Architecture, Engineering, Planning & Environmental Consulting Firms shows that the median pre-tax, pre-bonus profit margin on net service revenue for the firms surveyed has increased to 10.5%, after holding at less than 10.0% for the past three years.

Laura Rothman, managing editor of the report, explained that these profit levels are especially notable given firms’ recent increases in their overhead rates. “Overhead has reached its second-highest level in the past six years, at a median of 178.5% including bonuses, or 161.7% without bonuses,” she said. The survey calculates firms’ overhead rate as the ratio of overhead expenses (including general and administrative overhead, indirect labor and payroll expenses) to direct project labor.

Additional survey data shows that the median net service revenue per employee for these firms has reached a six-year high of $101,142, while pre-tax, pre-bonus profit per employee hit a high of $10,813.

For the complete survey, go to http://www.zweigwhite.com/store/ .