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
AEC Tech Innovation | Oct 8, 2024
New ABC technology report examines how AI can enhance efficiency, innovation
The latest annual technology report from Associated Builders and Contractors delves into how artificial intelligence can enhance efficiency and innovation in the construction sector. The report includes a resource guide, a case study, insight papers, and an essay concerning applied uses for AI planning, development, and execution.
Healthcare Facilities | Oct 8, 2024
Herzog & de Meuron completes Switzerland’s largest children’s hospital
The new University Children’s Hospital Zurich features 114 rooftop patient rooms designed like wooden cottages with their own roofs. The project also includes a research and teaching facility.
Mixed-Use | Oct 7, 2024
New mixed-use tower by Studio Gang completes first phase of San Francisco waterfront redevelopment
Construction was recently completed on Verde, a new mixed-use tower along the San Francisco waterfront, marking the end of the first phase of the Mission Rock development. Verde is the fourth and final building of phase one of the 28-acre project that will be constructed in several phases guided by design principles developed by a design cohort led by Studio Gang.
Brick and Masonry | Oct 7, 2024
A journey through masonry reclad litigation
This blog post by Walter P Moore's Mallory Buckley, RRO, PE, BECxP + CxA+BE, and Bob Hancock, MBA, JD, of Munsch Hardt Kopf & Harr PC, explains the importance of documentation, correspondence between parties, and supporting the claims for a Plaintiff-party, while facilitating continuous use of the facility, on construction litigation projects.
Glass and Glazing | Oct 7, 2024
Pattern language: An exploration of digital printing on architectural glazing
Architectural Glazing has long been an important expressive tool which, when selected and detailed thoughtfully, can contribute to the successful transformation of architectural concepts to reality.
University Buildings | Oct 4, 2024
Renovations are raising higher education campuses to modern standards
AEC higher ed Giants report working on a variety of building types, from performing arts centers and libraries to business schools. Hybrid learning is seemingly here to stay. And where possible, these projects address wellness and mental health concerns.
AEC Tech | Oct 3, 2024
4 ways AI impacts building design beyond dramatic imagery
Kristen Forward, Design Technology Futures Leader, NBBJ, shows four ways the firm is using AI to generate value for its clients.
Laboratories | Oct 2, 2024
Trends in scientific research environments: Q&A with Flad's Matt McCord
As part of an ongoing series, Matt McCord, AIA, NCARB, LEED AP BD+C, Associate Principal with Flad Architects, discusses the future of the scientific workplace.
Museums | Oct 1, 2024
UT Dallas opens Morphosis-designed Crow Museum of Asian Art
In Richardson, Tex., the University of Texas at Dallas has opened a second location for the Crow Museum of Asian Art—the first of multiple buildings that will be part of a 12-acre cultural district. When completed, the arts and performance complex, called the Edith and Peter O’Donnell Jr. Athenaeum, will include two museums, a performance hall and music building, a grand plaza, and a dedicated parking structure on the Richardson campus.
Data Centers | Oct 1, 2024
10 biggest impacts to the data center market in 2024–2025
While AI sends the data center market into the stratosphere, the sector’s accelerated growth remains impacted by speed-to-market demands, supply chain issues, and design innovation necessities.
