Zweig Group recently released the 2018 Financial Performance Survey. This publication offers a clear view into AEC industry trends and financial metrics. 

Many statistics dipped slightly downward when compared with the previous year, something demonstrative of a leveling effect since data collected over the 2016-2017 season showed some of the highest figures of the last 10 years. The 2017 version of this survey found median pre-tax, pre-bonus profitability figures of 14.7 percent. This year, profitability dipped to a still healthy 12.7 percent.

Net service revenue per full time equivalent (NSR/FTE) again reached a 10-year high. However, the year-over-year growth in NSR/FTE (1.8 percent) did not outpace inflation (2.1 percent) last year, after doing so four out of the last five years. NSR/FTE was $141,891 last year and this year reached $144,434.

During the last five years, the growth of NSR/FTE for AEC firms was around 13.8 percent, six and a half points above U.S. average inflation of 7.2 percent for that time frame. We still believe that with improvements in technology and a rebound in the department of transportation market, firms should continue to generate more revenue per FTE in 2018-2019 than they ever have before.

The breakeven multiplier shows the dollar amount a firm must generate through direct labor to cover all labor and overhead costs. The overall median was 2.67 — a typical firm needs to generate $2.67 for every $1.00 spent on direct labor to “breakeven.” As expected, high-profit firms led the way with a breakeven multiplier of 2.38 and low-profit firms lagged the sample with a breakeven multiplier of 3.03.

Debt-to-equity values moved back down from 1.04 to 0.72. This is likely because firms have focused on retaining earnings (due to the new tax code), as well as having strong profitability figures in the previous year. Work-in-process (WIP turnover) values increased to 17 days from 14 days. This impacts firms’ ability to use resources creatively, to promote growth, and is a symptom of not billing efficiently or upon completion of a particular task. Extended collection and billing periods can have a great impact on cash flows, bad debt write-offs, and eventually impact a firm’s liquidity position.

Backlogs continue to increase year-over-year with an average of 7.4 months. Larger firms had stronger backlogs than smaller firms with nearly 8.5 months of backlog for firms with more than 100 employees. Eighty percent of firms stated they have increased their operating profit projections for this year, with an average target operating profit margin of 22 percent.

Zweig Group’s 2018 Financial Performance Survey shows how firms performed on nearly 100 indicators. Each measure is described in detail so you can better understand the implications of being excessively high or low on any one measure. Firms can use this to target internal initiatives, investment opportunities, and improvement efforts to match their best-performing peers, or simply determine if their metrics are moving in the right direction.

For more information, check out the 2018 Financial Performance Survey at or contact

Will Swearingen is director of Research. He can be contacted at