Median A/E firm operating profit margins on net revenue (before incentive/bonus payments and taxes) have been on a steady rise in recent years, reaching a six-year high of 14.3% this year, according to business consulting firm PSMJ Resources’ 2015 A/E Financial Performance Benchmark Survey Report.
After posting all-time highs in 2007 and remaining stable in 2008, profit margins started to decline significantly beginning in 2009, due to the severe downturn in the economy. But, median profit margins on net revenue have been on the upswing in the past three years, hitting 11.4% and 13.0% in the 2013 and 2014 surveys, respectively—which, along with the 2015 data, supports the notion that backlogs are filling back up.
“It is certainly encouraging to see profit margins trending upward. But, there is another side to this coin. Just because the median has reached 14.3%, that doesn’t mean it should be an acceptable profit margin at all for an A/E firm,” says Frank A. Stasiowski, FAIA, Founder and CEO of PSMJ Resources. “There are plenty of A/E firms that can and do deliver profit margins far higher than this. These are the firm leaders who are able to really think differently—about project delivery, about marketing strategy, about value. Deliver a higher value and you can command higher fees…and yield higher profits.”
With data from 328 A/E firms across the United States and Canada, the 2015 PSMJ A/E Financial Performance Benchmark Survey Report is the go-to industry resource for firms wanting to increase cash flow, lower overhead, and improve overall financial results. Now in its 35th edition, the comprehensive report provides the most valuable research and insight available for making critical decisions that impact the success of a firm.
Related Stories
| Mar 30, 2012
18 handy tablet apps for AEC professionals
Check out these helpful apps for everyday design and construction tasks. Our favorite: MagicPlan, which uses GPS to help you measure and draw a floor plan of any room.
| Mar 29, 2012
U.K.’s Manchester Airport tower constructed in nine days
Time-lapse video shows construction workers on the jobsite for 222 continuous hours.
| Mar 29, 2012
Roller shade operating system wins IF Product Design Award
Design experts in the iF jury recognized the engineering invested in the RB 500 Roller Shade, including a metal clutch with a patented construction, a durable zamac housing with polished finish, and a chain drive unit that excels in maximum operating comfort.
| Mar 29, 2012
Lehigh engineering student wins Thornton Tomasetti Foundation Awards Scholarship
The scholarship is awarded annually to a graduate student in structural engineering deemed by the department to have the potential to make an impact in the field professionally.
| Mar 29, 2012
Construction completed on Las Vegas’ newest performing arts center
The Smith Center will be the first major multi-purpose performance center in the U.S. to earn Silver LEED certification.
| Mar 29, 2012
Apartments provide permanent housing for California homeless
Gonzalez Goodale Architects designed complex to embrace community and engender sense of pride among residents.
| Mar 28, 2012
40 Under 40, the Class of 2012
Chosen from 223 applicants, these 40 young AEC professionals represent the Class of 2012 in Building Design+Construction’s “40 UNDER 40” competition.
| Mar 28, 2012
Milestone reached for LEED-certified buildings?
Total number of major global green buildings now stands at 12,000.
| Mar 28, 2012
Holden Cancer Center opens at University of Iowa Hospitals and Clinics
The new cancer clinic provides a significant increase in patient space from the prior facility, which was located in an adjacent building.
| Mar 28, 2012
Meridian Design Build Begins work on 38 acre redevelopment project
The project includes construction of a new 150,585-sf cross dock facility that will include full service truck maintenance and repair bays, a truck wash, and approximately 20,000-sf of corporate office space.
