Architecture and Engineering Firm Profits Soar to Record Heights

July 23, 2007

Natick, MA - Driven by strong labor utilization rates and decreased overhead expense levels, profits for U.S. architecture and engineering firms have soared to an all-time high, a new report shows. Data in ZweigWhite's newly published 2007 Financial Performance Survey of Architecture, Engineering, Planning & Environmental Consulting Firms indicates that firms' median pre-tax, pre-bonus profit margin on net service revenue increased for the third straight year, reaching a level of 14 percent-an all-time high. Similarly, EBITDA (earnings before interest, taxes, depreciation, and amortization expenses) hit an all-time high of 15.9 percent of net service revenue.

''This is very encouraging news for the design community,'' remarks Ian Rusk, a specialist in A/E firm valuation, merger & acquisitions, and strategic planning, and the head of ZweigWhite's Advisory Services division. ''It reflects what we've been seeing and hearing among our consulting clients. Other than a few isolated pockets (such as residential development), the overall economy has continued to be strong, and design and environmental firms are benefiting from the increased demand for their services. This has led to growth, which in turn results in higher staff utilization levels, the ability to earn higher fees, and greater leverage of fixed overhead costs. The only damper we're witnessing is the difficulty most firms are having hiring and retaining key people.''

Data from the survey show firms' typical overhead rate (the ratio of total overhead to direct labor, excluding bonuses) is a median of 157.9 percent. Firms' utilization rate (the percentage of total raw staff labor charged to projects) is a median of 61.4 percent. The survey report also includes turnover rates, five years of personnel costs, details on finance and accounting staff, growth rates, and much more.

The 2007 Financial Performance Survey of Architecture, Engineering, Planning & Environmental Consulting Firms is available from ZweigWhite, one of the nation's leading source of management consulting, information, and education for the design and construction industry. ZweigWhite brings together experts in strategic business planning, organization, operations, business valuation, ownership transition, human resources, recruitment, finance and administration, information technology, mergers and acquisitions, market research, marketing, project management and project delivery methods. The firm is headquartered in Chicago with additional offices in Natick, MA, San Francisco and Washington, D.C. For further information, contact Jill Stoodley, [email protected] or go to

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