After three years of slow but continuing improvement, architecture and engineering (A&E) firms are healthier now than at any time since the start of the great recession, according to initial findings of the 2013 Architectural and Engineering Study from DiCicco, Gulman & Company LLP (DGC), a CPA and business consulting firm specializing in the A&E profession.
This soon-to-be released survey benchmarks financial performance and other key indicators based on input from over 40 architecture and engineering firms headquartered in the greater Boston area. The study, conducted annually, contains some of the most comprehensive financial data available on the A&E industry.
āMost firms are doing better than they did in 2011,ā says Chad DaGraca, a partner in DCGās A&E practice. While the report shows a 2.6% increase in profits, perhaps more significant is the fact that firms also increased hiring, made investments in infrastructure and saw continued growth in the volume of their business. āThese are signs of a true recovery,ā DaGraca says.
One reason for the improvement is renewed activity in the private sector. Many companiesāincluding a good number of the Fortune 500āhave been loosening their purse strings and investing in new buildings andĀ facilities. āCompanies are spending money because they have more confidence in the overall direction of the economy,ā he says.
At the same time, the residential housing market has stabilized and is improving in certain markets across the country. With more work to be found in the housing sector, firms that were forced to bid on other types of projects are increasingly returning to their normal line of work.
While competition remains stiff, there are clear signs of easing within the industry. The average billing multiple, for example, rose again in 2012, increasing to 3.12 from 3.08 in 2011. āThe pricing pressure in the marketplace is loosening up,ā DaGraca says. āMost firms would still characterize the competition as significant, but there is certainly more work to be had. This will also shift more and more emphasis towards focusing on best practices in the area of project management; as firms begin to grow again, they will need to ensure their projects are profitable in this competitive environment.ā
Likewise, the utilization rate, which is the percentage of time worked on billable projects, rose slightly to 65.3%, putting it above 65% for the first time since the recession.
While the survey focuses on 2012 data, responses indicate that 2013 will likely show continued improvement, DaGraca says. Another indication of continuing industry growth, he says, is the AIA's Architectural Billings Index, which has reported growth in design firm billings for eight of the last nine months. āWe are still not back to pre-2008 levels, but we are moving in the right direction, says Dave Sullivan, partner in DGCās A&E practice.ā
As A&E firms gain strength, Sullivan expects to see many firms tackling long-range strategic initiatives such as succession planning, the impact of industry consolidation, and staff development. Staffing, for example, is getting increased attention as firms try to make sure that they have people with the right skill sets in the right positions. Employees are also beginning to look for new opportunities as the job market eases. Turnover has been relatively low over the past two years, but that will change in 2013, so firms need to be prepared for those changes and have a plan in place to attract and retain good people.
āIndustry consolidation and succession planning will continue to be among the leading challenges for the industry in 2013ā, says Sullivan. āThe recession has put more pressure on the demographic shift in firm ownership created as the baby boomer generation heads to retirement. Firm owners need to plan early to execute a successful succession plan and to achieve their longer term ownership goals for the firm. This is not an easy task as many firms will attest to.ā The DGC 2013 Architectural and Engineering Study, which will be available this summer, highlights the firmās expertise and in-depth knowledge of the architecture and engineering professions. DGC experts analyze financial data from prominent firms in the Greater Boston region, focusing on operational performance metrics and identifying emerging trends.
About DiCicco, Gulman & Company LLP
DiCicco, Gulman & Company LLP (DGC) is a CPA and business consulting firm specializing in A&E firms, as well as private clients, real estate and commercial business. As an independent member firm of Moore Stephens North America, DGC has access to a global network of technical expertise and best practices, which result in elevated performance standards. For more information please visit www.dgccpa.com or call 781-937-5320.
Related Stories
Sponsored | Healthcare Facilities | May 3, 2022
Planning for hospital campus access that works for people
This course defines the elements of hospital campus access that are essential to promoting the efficient, stress-free movement of patients, staff, family, and visitors. Campus access elements include signage and wayfinding, parking facilities, transportation demand management, shuttle buses, curb access, valet parking management, roadways, and pedestrian walkways.
Sponsored | BD+C University Course | May 3, 2022
For glass openings, how big is too big?
Advances in glazing materials and glass building systems offer a seemingly unlimited horizon for not only glass performance, but also for the size and extent of these light, transparent forms. Both for enclosures and for indoor environments, novel products and assemblies allow for more glass and less opaque structureāoften in places that previously limited their use.
Architects | May 3, 2022
A U.K.-based design firm flaunts industrialized construction as it expands into U.S.
Bryden Wood wants to set up a network for manufactured components for repeatable building types.
Codes and Standards | May 3, 2022
American Institute of Steel Construction updates environmental product declarations
The American Institute of Steel Construction has released updated environmental product declarations (EPDs) āto help designers and building owners design more environmentally friendly buildings and bridges,ā according to an AISC news release.
Education Facilities | May 2, 2022
Texas School for the Deaf campus gateway enhances sense of belonging for deaf community
The recently completed Texas School for the Deaf Administration and Welcome Center and Early Learning Center, at the stateās oldest continuously operating public school, was designed to foster a sense of belonging for the deaf community.
Codes and Standards | May 2, 2022
Developer Hines, engineer MKA develop free embodied carbon reduction guide
Real estate management and investment firm Hines has released the Hines Embodied Carbon Reduction Guide. The free guide, produced with Magnusson Klemencic Associates (MKA), is the result of a two-year effort, relying on MKAās industry-leading knowledge of carbon accounting and involvement in programs such as the Embodied Carbon in Construction Calculator (EC3) Tool.
Building Team | May 2, 2022
HED and VAI announce merger to bring strategic expertise and drive community impact in Dallas
HED (Harley Ellis Devereaux), a leading national architecture and engineering Ā firm, today announced a merger with award-winning, Dallas-based VAI Architects Incorporated (VAI).
Laboratories | Apr 29, 2022
Oracle Industry Lab in Chicago enables development of solutions for multiple industries
The Oracle Industry Lab in Chicago, which provides customers in multiple industries the opportunity to test new technologies, recently opened.
Market Data | Apr 29, 2022
U.S. economy contracts, investment in structures down, says ABC
The U.S. economy contracted at a 1.4% annualized rate during the first quarter of 2022.
Codes and Standards | Apr 28, 2022
Architecture firm Perkins&Will to deliver ācarbon forecastsā for clients
Global architecture firm Perkins&Will says it will issue its clients a ācarbon forecastā for their projects.