With 38% of projects over budget and 35% behind schedule, according to the 42nd Annual Deltek Clarity Report, architecture firms are focusing on the fundamentals. This includes tracking metrics and adopting new technology to keep a closer pulse on performance and profitability. Many architecture firms have a ways to go as only 25% currently see their business as digitally mature, but 76% of firms envision firm digital sophistication in five years, according to the report.
Where to Start?
No matter where your firm is today, consider monitoring your firm’s metrics to keep projects – and profitability – on track. The 10 essential metrics to track, along with industry averages, include:
- Operating Profit on Net Revenue – 19%
- Net Labor Multiplier – 2.97
- Overhead Rate – 146%
- Total Payroll Multiplier (Revenue Factor) – 1.75
- Utilization Rate – 61%
- Projects On Budget/On Schedule – 65%
- Net Revenue Growth Forecast – 4%
- Win Rate/Capture Rate – 48%
- Employee Turnover Rate – 12%
- Staff Growth/Decline – .05%
How Does Your Firm Rank?
Use these metrics to determine if your firm is a high, middle or low performer to establish a baseline. Then, determine which metrics you’d like to improve and by how much. Track the metrics on a monthly basis so you can keep tabs on your firm’s overall performance and adjust your strategy as needed. Perhaps even share information with your teams to make them part of the process so you are all striving for one unified goal.
Get the Industry Scoop
To learn more about key performance indicators and industry trends, peruse the 42nd Annual Deltek Clarity Architecture and Engineering Study. This leading market trends report helps architecture and engineering firm leaders more effectively run their businesses – so they can boost profitability, utilization and growth. The report includes sections for core business areas, including financial management, project management, business development, human capital management, and technology trends.