STRATEGY & GROWTH: Aiming for the median is aiming for mediocrity.
If you aren’t outperforming the median, you are just keeping up but not truly excelling. Upper quartile (or 80th percentile, the AEC Circle of Excellence standard in PSMJ’s 2025 AE Financial Performance Benchmark Survey Report) firms often think and act differently than the rest of the pack. They set higher fees, invest more in project management improvement, and fire bad clients…for starters.
TALENT OPTIMIZATION: Job titles are a lousy way to benchmark compensation.
It is tempting to just seek out a salary benchmark value for a Level II Engineer when looking at the salaries for individuals in that role. Stop right there! The truth is that these individuals, in even just one week, end up doing Level I work one day, project management work the next day, and so on. Years of experience in PSMJ’s 2025 AE Management and Staff Compensation Benchmark Survey Model is a much better compensation benchmark indicator (in addition to professional degree, job performance, and location).
FINANCIAL MANAGEMENT: Higher utilization isn’t the secret to boosting profitability.
The AEC business model seems pretty simple. Just get people busier and profits will go up…right? Wrong. If I need to be more billable, I’ll just solve for that and resort to tendencies like dumping more time on a job. Instead, look at the Revenue Factor (Utilization Rate x Direct Labor Multiplier). Boost this, and there is a much tighter correlation to profit margins. See how your firm stacks up on these metrics in PSMJ’s 2025 AE Financial Performance Benchmark Survey Report.
PROJECT MANAGEMENT: Want to boost project profits? Get more aggressive in fee setting.
Aim too low with your Target Direct Labor Multiplier, and you are setting yourself up for lackluster profits. According to PSMJ’s 2025 AE Financial Performance Benchmark Survey Report, the median Target Direct Labor Multiplier reached a record high of 3.25. Again, that is just the median! Aim higher, and the profits will come.
FINANCIAL MANAGEMENT: You are an AEC firm…not a bank.
Slow payers are a serious drain on cash flow and increase the firm’s working capital requirements. According to PSMJ’s 2025 AE Financial Performance Benchmark Survey Report, firms in the Circle of Excellence (the top 20% performers in the survey) average an Accounts Receivable Collection Rate of 52 days of Gross Revenue (compared to 62 days for the overall data set). How do they get paid faster? They charge retainers, they invoice more frequently, they track WIP, and they ensure invoices are synced up with the client’s requirements at the start of the job. Even getting a client’s internal project number on the invoice is sometimes all it takes to get paid faster.
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