Survey Says AE Billings Rising

May 26, 2006
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NEWTON, MASS. — Hourly billings and management salaries both rose the past year at A/E firms, but salaries increased at a higher rate than billings.

That finding comes from two annual studies conducted separately by PSMJ Resources Inc., a training and consulting firm that advises architecture, engineering and construction companies from its base in Newton, Mass.

In its annual A/E fees and pricing survey of 123 companies, reporting firms told PSMJ that billings rose by an average of 6 percent — a pricing improvement for an industry that didn't experience an increase in the previous year.

But most of the increase came from mid-level positions, senior engineers and architects, rather than from management and senior technical positions. Average billings for the latter rose by only 2.7 percent, while rates for the former went up by 9 percent.

Other survey findings were:

  • Lump sum continued to be the most popular form of fee contract, as firms used it 51 percent of the time last year.

  • While 75 percent of firms billed for reimbursable project expenses, only 27 percent included a markup on outside consultant fees.

  • Sole source arrangements and contract charge orders accounted for 48 percent of new work that was awarded last year. Neither of those methods are forms of price competition.

In all, the PSMJ study had 17 hourly billing rates reported and a dozen topped the 2005 inflation rate of 3.4 percent.

In its annual management salary survey of 154 companies, reporting firms told PSMJ that base salary rose by a median 8.9 percent last year — a significant gain over the 2.5 percent hike last year, but less than the 11 percent increase from 2002.

But median total direct compensation rose by 15.5 percent, mostly due to a median bonus that was 43 percent more than the previous year.

Other survey findings were:

  • Firms reported a median staff growth rate of 10 percent, up by 6 percent from the last survey.

  • Payment of professional dues, licenses and continuing education continued to be the most frequently offered fringe benefits for management.

  • About 26 percent of the reporting firms expect bonuses to rise again this year, while only 6 percent forecasted a decline.

  • Senior managers worked up to 12 percent overtime, while lower-level managers worked up to 10 percent overtime.

PSMJ conducted the pricing survey for the 21st consecutive year and the salary survey for the 24th. The surveys included A/E firms in the United States and Canada. More information on both surveys is available at www.psmj.com.     BJX

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