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Survey shows rebound in design industry is for real, outlook is good

Profits earned by engineering and architectural firms last year continued their upward climb from the bottom hit in 2009, indicating the design professions are in real recovery mode, according to a highly regarded national survey.

After plummeting to a decade low of 8.34% in 2009, the 203 firms responding to the 34th annual Deltek Clarity Architecture and Engineering Industry Study reported average operating profit (on net revenue) of 10.1% last year.

"Utilization is rising.  Overhead rates are falling. The average collection period declined, and net revenue per employee is growing.  On the balance sheet, the current ratio is up, and debt-to-equity is down," according to the survey report.

"The bottom line: A&E firms are gradually bouncing back from the economic slump and have finally balanced their workload and staffing to manageable numbers.  The million-dollar question: Will we continue in a slow recovery pattern for several more years, or does the next boom begin now?"

Those who responded to the survey said they expect a continuation of slow and steady growth, rather than a boom period ahead.

Nearly half the respondants said they expect their private sector work to grow in 2013, while only 31% said they expect their public sector work to increase, and the same percentage expect institutional work to go up.

Some other key performance indicators reported in the survey:

  • Utilization Rate – 59.9%
  • Net Labor Multiplier – 2.91
  • Overhead Rate (excluding bonuses) – 161.6%
  • Average Collection Period – 76 days
  • Current Ratio – 2.24
  • Debt to Equity – 0.860

The 44-page survey report contains a special section on "High Performing Firms" (those that have a Net Labor Multiplier of 3.0 or higher and an Operating Profit rate of 15% or higher).

It breaks down data by small, medium and large firms and by firms that are primarily E/A and those that are A/E.

Deltek is a leading global provider of enterprise software and information solutions for project-based businesses including professional services firms and government contractors.  This annual industry report is made available to ACEC members at no cost.

Download the survey report.



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