Monday, June 11, 2012, 11:39am
An improving economy and industry-wide restructuring are helping the recovery of the architecture and engineering (AE) industry in Greater Boston, according to a recent report from Woburn-based, AE-focused CPA and consulting firm DiCicco, Gulman Co. LLP (DGC).
Profits for the average AE firm increased roughly 23 percent from $9.27 per direct hour to $11.40 per direct hour. Profit percentages in 2011 averaged 11 percent, compared with 8.7 percent in 2010 and just .4 percent in 2009.
DGC’s findings are in line with the American Institute of Architects’ Architecture Billings Index, which was at 50.4 nationally in March 2012 and 53.9 in the Northeast. Scores above 50 indicate an increase in billings, while scores below 50 indicate a decrease in billings.
But DGC also found that while firms overall fared better in 2011, improvements were not uniform. Hourly profits at local firms ranged from a loss of approximately $8 an hour to a profit of $40 an hour.
“While the study shows overall improvement for the industry, it’s important to note that there is a significant gap between firms with the best and worst performance,” said Chad DaGraca, a partner in DGC’s AE group. DaGraca noted that increased levels of competition for projects has put pressure on project pricing and will require firms to become more efficient and adhere to best practices of project management.
“Given the pricing pressures in the marketplace, there is much less room for inefficiencies when managing multiple projects if a firm wants to improve profitability,” DaGraca added. “Many firms will be better off in the long run, saying no to low-ball pricing; especially as it relates to long-term multi-year contracts.”