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.
“Most firms are doing better than they did in 2011,” says Chad DaGraca, a partner in DCG’s 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. “These are signs of a true recovery,” DaGraca says.
One reason for the improvement is renewed activity in the private sector. Many companies—including a good number of the Fortune 500—have been loosening their purse strings and investing in new buildings and facilities. “Companies are spending money because they have more confidence in the overall direction of the economy,” 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. “The pricing pressure in the marketplace is loosening up,” DaGraca says. “Most 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.”
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. “We are still not back to pre-2008 levels, but we are moving in the right direction, says Dave Sullivan, partner in DGC’s A&E practice.”
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.
“Industry consolidation and succession planning will continue to be among the leading challenges for the industry in 2013”, says Sullivan. “The 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.” The DGC 2013 Architectural and Engineering Study, which will be available this summer, highlights the firm’s 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
| Dec 22, 2014
Skanska to build Miami’s Patricia and Phillip Frost Museum of Science
Designed by Grimshaw Architects, the 250,000-sf museum will serve as an economic engine and cultural anchor for Miami’s fast-growing urban core.
| Dec 22, 2014
Studio Gang to design Chicago’s third-tallest skyscraper
The first U.S. real-estate investment by The Wanda Group, owned by China’s richest man, will be an 88-story, 1,148-ft-tall mixed-use tower designed by Jeanne Gang.
| Dec 19, 2014
Zaha Hadid unveils dune-shaped HQ for Emirati environmental management company
Zaha Hadid Architects released designs for the new headquarters of Emirati environmental management company Bee’ah, revealing a structure that references the shape and motion of a sand dune.
| Dec 19, 2014
Chicago Architecture Biennial to hold 'Lakefront Kiosk Competition'
The first Chicago Architecture Biennial will take place from October 2015-January 2016, with a theme of "The State of the Art of Architecture."
| Dec 18, 2014
Frank Lloyd Wright's Taliesin West to be recreated—with LEGO
Containing more than 180,000 LEGO bricks in 11 colors and 120 different shapes, the model measures eight by four feet and is made entirely of standard LEGO parts.
| Dec 18, 2014
11 new highs for tall buildings: CTBUH recaps the year's top moments in skyscraper construction
The Council on Tall Buildings and Urban Habitat cherrypicked the top moments from 2014, including a record concrete pour, a cautionary note about high-rise development, and two men's daring feat.
| Dec 18, 2014
International Parking Institute and Green Parking Council collaborate with GBCI
The new collaboration recognizes importance of sustainable parking facility design and management to the built environment.
| Dec 18, 2014
Top 10 sports facilities of 2014: Designboom ranks the year's best projects
The list includes some of the year's epic stadiums, such as World Cup Stadium Arena de Amazonia in Manaus, Brazil, and smaller projects, like the Spordtgebouw Sports Centerin the Netherlands.
| Dec 18, 2014
In response to ultra-open and uber-collaborative office environments
Susan Cain’s bestselling 2012 book, "Quiet: The Power of Introverts in a World That Can’t Stop Talking" has made an impact on how we understand our current workforce, recognizing that at least one-third of the people we work with are introverts, writes SRG Partnership's Susan Gust.
| Dec 17, 2014
USGBC announces 2014 Best of Green Schools honorees
Houston's Monarch School was named the K-12 school of the year, and Western Michigan University was honored as the top higher-ed institution, based on environmental programs and education efforts.
