2018 A/E Financial Performance Benchmark Survey Report
Table of Contents

Executive Summary

Big Picture Results
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Survey Results

The Income Statement
Operating Profits (Before Incentive/Bonus Payments & Income Taxes) as a Percentage of Net Revenues
Operating Profits (Before Incentive/Bonus Payments & Income Taxes) as a Percentage of Gross Revenues
Net Profits (Before Income Taxes) as a Percentage of Net Revenues
Net Profits (Before Income Taxes) as a Percentage of Gross Revenues
Net Profits (After Income Taxes) as a Percentage of Net Revenues
Net Profits (After Income Taxes) as a Percentage of Gross Revenues
Gross Profits (i.e., Contribution Margin) as a Percentage of Net Revenues
Gross Profits (i.e., Contribution Margin) as a Percentage of Gross Revenues
Net Revenues per Direct Labor Hour
Net Revenues per Direct Labor Hour by State
Direct Labor Costs per Direct Labor Hour
Direct Labor Costs per Direct Labor Hour by State
Total Hourly Costs (THC) per Direct Labor Hour
Direct Project Expenses
Labor Utilization Rate (Payroll Dollars)
Net Direct Labor Multiplier Achieved
Net Payroll Multiplier (i.e., Revenue Factor)
Net Revenues Surplus (Deficit) as a Percentage of Target Net Revenues

Analysis of Labor Overhead Expenses
Operating Overhead Rate (Before Incentive/Bonus)

Operating Overhead Rate (Before Incentive/Bonus) by State
Operating Overhead Rate (After Incentive/Bonus)
Overhead Rate (FAR Format)
Overhead Rate (FAR Format) by State
Labor Overhead Rate (i.e., Payroll Burden)
General Overhead Rate
Mandatory Payroll Taxes as a Percentage of Direct Labor
Vacation, Sick Leave & Holiday Pay as a Percentage of Direct Labor
Group Insurance Expenses as a Percentage of Direct Labor
Mandatory Retirement Contribution as a Percentage of Direct Labor
Discretionary Retirement Contribution as a Percentage of Direct Labor
Total Retirement Contribution as a Percentage of Direct Labor
Bonus/Incentive Payments Paid Out
Discretionary Bonus/Incentive Payments (Percentage of Total Paid Out)
Total Bonus/Incentive Payments as a Percentage of Direct Labor
Indirect Labor Rate (Without Paid Time Off, BD & IT)
Indirect IT Expenses as a Percentage of Direct Labor
Space Expenses as a Percentage of Direct Labor
General Insurance Expenses as a Percentage of Direct Labor
Professional Liability Insurance Expenses as a Percentage of Direct Labor
Telephone Expenses as a Percentage of Direct Labor
Registrations & Licenses Expenses as a Percentage of Direct Labor
Interest Expenses as a Percentage of Direct Labor
Bad Debt Expense as a Percentage of Direct Labor
Education Expenses as a Percentage of Direct Labor
Legal & Accounting Expenses as a Percentage of Direct Labor
Production Supplies Expenses as a Percentage of Direct Labor
Office Supplies Expenses as a Percentage of Direct Labor
State, Local Taxes, Permits & Licenses Expenses as a Percentage of Direct Labor
Overhead Allocation Method
Use of Outside Accounting

The Balance Sheet
Current Ratio Discussion

Current Ratio Results
Accounts Receivable Collections (Days)
Average Work-in-Process (Days)
Total Debt-to-Equity Ratio
Return on Equity
Return on Total Assets
Return on Payroll
Bank Debt to Equity Ratio
Line of Credit as a Percentage of Net Revenues
Return on Overhead (ROO)
Return on Working Capital Assets (RoWC)

Business Development Costs
Principal in Charge of Business Development (Percentage)

Total Staff to Full-Time BD Staff Ratio
Overall Comparison of Firms With Full-Time BD Staff Versus Those Without
Business Development Costs as a Percentage of Gross Revenues (With and Without BD Staff)
Business Development Costs as a Percentage of Net Revenues (With and Without BD Staff)
Business Development Labor Costs as a Percentage of Total Business Development Costs (With and Without BD Staff)
Net Revenues Backlog Change (From Last Year)
Net Revenues Backlog Change (From Last Year) by State
Net Revenues Backlog (as a Percentage of Annual Net Revenues)
Net Revenues Backlog (in Days of Average Revenues)
Gross Revenues Change (From Last Year)
Gross Revenues Change (From Last Year) by State
Final Thoughts on Business Development Costs

Cash-Basis Results
Cash Versus Accrual Methods

Cash-Basis Income Statement
The Balance Sheet
Operating Overhead Rate (Before Incentive/Bonus)
Operating Profits (Before Incentive/Bonus Payments & Income Taxes) as a Percentage of Net Revenues
Net Direct Labor Multiplier Achieved
Detailed Expense Breakdowns

Staff Ratios
Technical Staff to Non-Technical Staff Ratio

Technical Staff to Project Managers Ratio
Technical Staff to Partners/Principals Ratio
Total Staff to Partners/Principals Ratio
Total Staff to Accounting Staff Ratio
Total Staff to IT Staff Ratio
Total Staff to HR Staff Ratio
Total Staff to Full-Time BD Staff Ratio
Total Staff to Professional Staff Ratio
Technical Project Staff to Professional Staff Ratio
Staff Size Change (Percentage)
Staff Turnover Rate

Non-Financial Managers Data
Target Multiplier on Direct Labor

DPE Factor on Direct Labor
Labor Chargeability Rate (Payroll Hours)
Individual Employee Chargeability
Direct Labor Hours per Technical Staff Ratio
Direct Labor Hours per Total Staff Ratio
Direct Labor Hours per Project Manager Ratio
Direct Labor Hours per Partner/Principal Ratio
Net Revenues per Technical Staff
Net Revenues per Total Staff
Net Revenues per Project Manager
Net Revenues per Partner/Principal
Net Revenues per Accounting Staff
Net Revenues per IT Staff
Net Revenues per HR Staff
Salary Costs (Without Incentive/Bonus) per Total Staff
Salary Costs (Without Incentive/Bonus) per Total Staff by State
Other Costs per Total Staff
Space Expenses per Total Staff
Business Development Costs per Technical Staff
Education Expenses per Total Staff
Registrations & Licenses Expenses per Professional Staff
Group Insurance Expenses per Total Staff
Professional Liability Insurance Expenses per Total Staff
Total Insurance Expenses per Total Staff
Payroll Taxes per Total Staff
Local Taxes, Permits & Licenses Expenses per Total Staff
Total Taxes per Total Staff
IT Operating Expenses per Total Staff
General Overhead Rate per Technical Staff
General Overhead Rate per Total Staff
Operating Profits (Before Incentive/Bonus & Income Taxes) per Technical Staff
Operating Profits (Before Incentive/Bonus & Income Taxes) per Total Staff
Operating Profits (Before Incentive/Bonus & Income Taxes) per Project Manager
Operating Profits (Before Incentive/Bonus & Income Taxes) per Partner/Principal
Net Revenues Surplus (Deficit) per Total Staff
Accounts Receivable per Total Staff
Fixed Assets per Total Staff
Total Assets per Total Staff
Equity per Total Staff

Employee Stock Ownership Plans (ESOPs)
Why an ESOP?

ESOP Funding, Fees, and Sharing Firm Finances
Survey Questions Related to ESOPs
Percentage of A/E Firms with ESOPs
ESOP Ownership & Required Contributions
Third-Party Financing for ESOPs
Benefits of ESOPs