Income Statement Cont.
Net service revenue (NSR)
•Many firms use the services of specialty sub-consultants •Typically, firms bill the services of the sub-consultants to the ultimate client. •NSR is the revenue of a firm that is attributable to the effort of its own employees. Direct and reimbursable costs are those expenses that can be specifically attributed to a project. Examples include
•Direct labor: employee time that has been associated with a client project •Meeting travel, report reproduction
Indirect costs are those that cannot be specifically attributable to a project. They are also referred to as overhead costs. Examples include:
•Indirect labor: employee time that is not associated with a client project •Corporate insurance •Team building events
“People Costs” represent more than 60% of the total costs of an AEC firm
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THE PRINCIPALS ACADEMY 2022
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