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Fee and billing trends

Fee and billing trends

By Will Swearingen, Vice President & Director of Research and Advisory, Zweig Group

From The Zweig Letter

The latest data reveals increased billing rates, improved chargeability, and refined collections processes in AEC.

Zweig Group’s 2024 Fee & Billing Report of AEC Firms offers insights into fees, billing rates, chargeability/utilization rates, project contracts, and billing practices. Compiled through an extensive online survey across diverse industry firms, this year’s report encompasses analysis on more than 150 job titles and 15 market sectors.

Here are some key findings from the report:

  •  Billing rate hikes. According to the 2024 report, there has been a surge in billing rates, with 100 percent of respondents reporting fee hikes averaging 10 percent over the past three years. It’s encouraging to see this figure as it’s in line with the base compensation increases Zweig Group reported earlier this year in its 2024 Salary Reports of AEC Firms.
  •  Chargeability changes. With strong backlogs and a continued strain on capacity, we saw the gap between actual and projected staff chargeability decline again this year. It has steadily declined from 6.3 percent in 2015 to 2.5 percent this year, indicating both enhanced project budgeting practices and consistent workloads.
  •  Refined collections management. A notable shift in the data suggests collections management is shifting from project managers to accounting personnel. This refinement in process and accountability can improve many aspects of the collections cycle, but it can also free up your high performers to focus on higher ROI efforts than sending collections emails!
  •  Quicker collections. The report also highlights a standard window of roughly 45 days for considering invoices as past due. Collections have sped up by around four days on average (down to 54 days) when looking at pre-COVID and post-COVID data sets. Again, this highlights improvements and continued attention from firm leadership on improving cash flow and working capital positions for their firms.

Zweig Group’s Fee & Billing Report of AEC Firms is the standard guideline for AEC industry firms looking to benchmark fees, billing rates, and billing practices, and evaluate productivity and utilization. This invaluable resource equips firms with the necessary benchmarks to maintain competitive bids while ensuring profitability amidst evolving industry dynamics. Click here to learn more! 

Will Swearingen is vice president and director of research and advisory services at Zweig Group. He can be reached at wswearingen@zweiggroup.com