Firm Leaders Reinvest and Expand Businesses as Profitability Increases

U.S. architecture firms have experienced a near complete recovery from the Great Recession, which has allowed firm leaders to reinvest profits back into their businesses. These findings, along with an in depth look at topics such as firm billings, staffing, and international work, are covered in the “The Business of Architecture: 2016 Firm Survey Report”.  The report offers metrics that provide insights into how architecture firms are operating and is available for purchase here.

“More than at any point in recent memory, there has been rise in the amount of renovation projects that architects have led compared to new construction activity over the past decade plus,” said AIA chief economist, Kermit Baker, Hon. AIA, PhD.  “A lot this has to do with green building incentives towards renovations, improved construction methods and products that increase the longevity of buildings, and a slower growing population that reduces the need for new construction.”

Key highlights:

  • Net billings at architecture firms were $28.5 billion at the peak of the market in 2008 and had nearly recovered to $28.4 billion by 2015.
  • Percentage of firms reporting a financial loss declined sharply in recent years from more than 20 percent in 2011 to fewer than 10 percent by 2015.
  • Growing profitability has allowed firms to increase their marketing activities and expand into new geographical areas and building types to diversify their design portfolios.
  • Renovations made up a large portion of design work with 45 percent of building design billings coming from work on existing facilities, including 30 percent from additions to buildings, and the remaining from historic preservation projects.
  • Billings in the residential sector topped $7 billion, more than 30 percent over 2013 levels.
  • Modest gains in diversity of profession with women now comprising 31 percent of architecture staff (up from 28 percent in 2013) and minorities making up 21 percent of staff (up from 20 percent in 2013).
  • Use of Building Information Modeling (BIM) software has become standard at larger firms with 96 percent of firms with 50 or more employees report using it for billable work (compared to 72 percent of mid-sized firms and 28 percent of small firms).
  • Newer technologies including 3D printing and 4D/5D modeling are reported being used at only 11 percent and 8 percent of firms respectively.
  • Energy modeling currently has a low adoption rate with 13 percent of firms using it for billable work, although this share jumps to 59 percent for large firms.

“From a practice standpoint, digital modeling is firmly entrenched in the early phase of design work and expanding into subsequent phases, with the potential for more involvement for architects through the construction and facility management processes,” said AIA senior director of research, Michele Russo. “In the coming years we expect firms will be adding technological dimensions to their design work through more utilization of cloud computing, 3D printing and the use of virtual reality software. This should help further efficiencies, minimize waste and project delivery delays, and lead to increased bottom line outcomes for their clients.”

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