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
| Dec 5, 2013
Exclusive BD+C survey shows reaction to Sandy Hook tragedy
More than 60% of AEC professionals surveyed by BD+C said their firms experienced heightened interest in security measures from school districts they worked with.
| Dec 5, 2013
Translating design intent from across the globe
I recently attended the Bentley User Conference in Vejle, Denmark. I attended the event primarily to get a sense for the challenges our Danish counterparts are experiencing in project delivery and digital communication. One story I heard was from a BIM manager with Henning Larsen Architects in Denmark, who told me about a project she’d recently completed overseas in the Middle East. She outlined two distinct challenges and offered some interesting solutions to those challenges.
| Dec 4, 2013
SmithGroupJJR opens office in Shanghai, China
SmithGroupJJR, the oldest architecture and engineering firm in the U.S., has opened an office in Shanghai, China. The firm will focus on several of China’s biggest growth markets: research and development, healthcare, continuing care/retirement communities, and higher education.
| Dec 4, 2013
First look: Dubai's winning bid for World Expo 2020 [slideshow]
Dubai has been chosen as the site of the 2020 World Expo. HOK led the design team that developed the master plan for the Expo, which is expected to draw more than 25 million visitors from October 2020 through April 2021.
| Dec 3, 2013
‘BIM for all’ platform pays off for contractor
Construction giant JE Dunn is saving millions in cost avoidances by implementing a custom, cloud-based BIM/VDC collaboration platform.
| Dec 3, 2013
Historic Daytona International Speedway undergoing $400 million facelift
The Daytona International Speedway is zooming ahead on the largest renovation in the Florida venue’s 54-year history. Improvements include five redesigned guest entrances, an extended grandstand with 101,000 new seats, and more than 60 new trackside suites for corporate entertaining.
| Dec 3, 2013
Creating a healthcare capital project plan: The truth behind the numbers
When setting up a capital project plan, it's one thing to have the data, but quite another to have the knowledge of the process.
| Dec 3, 2013
Architects urge government to reform design-build contracting process
Current federal contracting laws are discouraging talented architects from competing for federal contracts, depriving government and, by inference, taxpayers of the best design expertise available, according to AIA testimony presented today on Capitol Hill.
| Dec 3, 2013
Construction spending hits four-year peak after rare spike in public outlays
An unusual surge in public construction in October pushed total construction spending to its highest level since May 2009 despite a dip in both private residential and nonresidential activity.
| Nov 27, 2013
BIG's 'oil and vinegar' design wins competition for the Museum of the Human Body [slideshow]
The winning submission by Bjarke Ingels Group (BIG) and A+ Architecture mixes urban pavement and parkland in a flowing, organic plan, like oil and vinegar, explains Bjarke Ingels.
