Zweig Group’s 2016 Fee and Billing Survey of Architecture, Engineering and Environmental Consulting Firms showed some historical trends continued and validated some practices in the industry. For example, during the last five years, more and more firms are using different contracts for different projects and even more are letting the client dictate the type of contract that is put into place. In 2012, 20 percent of respondents used the same contract for every project. That number has declined each year and now fewer than 10 percent are using the same contract for each project. This provides firms with the ability to tailor the needs of the firm around the needs of the client or project.
In all of the markets identified by Zweig Group’s 2016 Fee and Billing Survey, lump sum/fixed priced contracts were the most frequently cited contract type and were identified as the primary contract by more than 70 percent of respondents. Lump-sum or fixed-price client contracts generally allow for materials, supplies, services, overhead, and profit to all be lumped into one line item, whereas cost plus time and materials contracts, and guaranteed maximum price contracts may require more diligent accounting of time, supplies, and materials.
Though nearly half of this year’s respondents reported using building information modeling (BIM) systems, more than 60 percent of them do not charge their clients for BIM use, but rather charge straight time for the employee. Twenty-nine percent include it as overhead and 10 percent include it as a direct cost.
When it comes to invoicing clients, it helps to make sure everything is correct before sending a request for payment. More and more firms (81 percent) are preparing a draft invoice that is reviewed by the project manager and/or the accounting department before the invoice is sent out. According to Zweig Group’s 2016 Financial Performance Survey, the standard collection period for AEC firms has increased this year to around 85 days. This is quite a jump from 68 days just last year, but when it comes time to collect past due accounts receivable, more firms (82 percent) are beginning to show aging accounts on their invoices.
Across all job titles included in the analysis of billing rates, the average increase in rates during the last two years was 3.2 percent per job title. Taking the overall average eliminated some of the noise associated with job titles and the accompanying rate for that title. From an engineer I to an engineer VI, the average increase from level to level (I to II, II to III, etc.) was just under 18 percent, with the largest jump occurring from engineer V to engineer VI (see Figure 1). This (engineer VI) was typically a principal or vice president-level position. In a similar analysis, levels of project management were investigated and, on average, a 14 percent increase in billing rates accompanied an upward title adjustment (i.e., project coordinator II to project coordinator III or coordinator III to project manager).
The 2016 Fee and Billing Survey of AEP and Environmental Consulting Firms is available for purchase (print or digital version) at https://zweiggroup.myshopify.com/collections/frontpage/products/fee-billing-survey.
Will Swearingen is director of Books and Surveys. He can be contacted at email@example.com.
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