Survey of Boston Architectural Industry Reports Stabilization After Sharp Declines

The 2011 Architectural Survey from CBIZ Tofias, part of the nation's seventh- largest accounting and tax provider, indicates the architecture industry in Greater Boston has stabilized after two years of sharp declines in profit, the worst two years since the survey began over 25 years ago.

Architecture firms in Greater Boston still saw decreases in average...

profit per direct hour and billable hours, but the rates were comparable to previous years, a sign of stabilization. On a positive note, many firms have reached profitability by controlling expenses and several have secured and maintained a larger pipeline of future work.

"The architecture industry continues to face headwinds as the real estate market slowly recovers," says David Swan, author of the report and Leader of the Architecture, Engineering and Consulting (A/E/C) Practice. "The 25-plus year survey trends indicate the profitability of the architecture industry is highly cyclical, and we anticipate seeing a gradual shift to higher profit levels moving forward. Firms will continue to closely monitor their overhead expenses to be in position to capitalize as available project work increases."

The 2011 Architectural Survey reported the following trends:

-- The slowdown in commercial building is a symptom of broader industry trends and resulted in a slowing demand for new and existing architecture projects.

-- Average profit per direct (billable) hour and the direct labor utilization rate (direct labor hours / total labor hours) both leveled off from the dramatic decreases reported in the 2010 and 2009 surveys. This rate stabilization indicates that the significant downward profit cycle trend is ending.

-- Firms saw an approximate 9 percent average decrease in direct hours, which was not as severe as the approximate 19 percent average decrease in direct hours from 2008 to 2009. This should lessen the need to reduce staff levels or work schedules compared to the past couple of years.

-- The average direct labor billing multiple remained flat at approximately 3.0, which is fairly consistent with prior years since 2004. This indicates that firms have been able to maintain solid project management on their jobs during these challenging economic times.

To view a copy of the survey, please visit CBIZ Tofias 2011 Architectural Survey. The survey is based on 2010 financial information supplied by CBIZ Tofias' architectural clients representing a cross-section of greater Boston architectural firms.

CBIZ Tofias ( www.cbiztofias.com ) is part of CBIZ, Inc, a leading accounting provider with offices nationwide including Boston, Providence, New Bedford and Newport. CBIZ Tofias operates in association with Mayer Hoffman McCann P.C. -- Tofias New England Division, an independent CPA firm, that delivers audit and other attest services. CBIZ Tofias and Mayer Hoffman McCann work seamlessly together to service their clients. Together, the companies are part of the 7th largest accounting provider in the U.S. (source:Inside Public Accounting).