2015 Annual Survey of Greater Boston architectural industry points to economic growth stabilization

2015 Architectural Survey

Boston, MA The 2015 Architectural Survey from CBIZ Tofias reported that the Greater Boston architecture industry continues to strongly recover from the economic downturn, with a record high reached in profit per direct billing hour as a result of firms’ increased efficiency and revenues. The survey results indicate that closely related industries – such as real estate and construction – are seeing similarly positive economic indicators and growth.

For the second consecutive year in the history of the 30-year survey, profit per direct billing hour reached a new high of $18.85. Contributing to the increase was a $3 rise in the average billing rate per direct hour coupled with a record high billing multiple of 3.26 times direct labor, indicating that firm personnel are efficiently completing projects.

“Overall, the survey yielded that the architecture industry, which is a bellwether for the construction and real estate industries, is performing strongly by maximizing their resources to usher in profits,” said David Swan, author of the report and leader of the Architecture, Engineering and Consulting (A/E/C) practice. “The record high profitability rates achieved in both 2013 and 2014 will be difficult, though not impossible, to repeat in 2015 and beyond. To maintain profits’ upward trajectory, firms should focus on finding optimal balance between billing rates and overhead costs while being mindful of the direct hour utilization rate in order to improve overall operating efficiency.”

The 2015 Architectural Survey yielded the following trends and analyses: • Overhead rates appear to be stabilizing, with the overhead rate per hour in 2014 coming in at $60.18, just 4 cents higher than 2013. There may be an opportunity for many in the field to reduce overhead by increasing the utilization of staff, which would reduce indirect labor costs while positively affecting the direct labor utilization rate. • The direct labor utilization rate (percentage of time worked on billable projects) rebounded from a decline in 2013 and rose by 1% to 63.7% in 2014. • The direct labor billing multiple reached a record high, increasing from 3.19 times direct labor in 2013 to 3.26 in 2014. • The most profitable firms reached direct labor utilization rates at or above 65%, with a few firms achieving rates in the 70% range. • Continuing a positive trend that has been seen since 2010, the average billing rate per direct hour increased from $111.37 in 2013 to $114.41 in 2014.

To download a copy of the survey, click on CBIZ Tofias 2015 Architectural Survey. The survey is based on 2014 financial information supplied by CBIZ Tofias’ architectural clients representing a cross-section of Greater Boston architectural firms.