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Financial statements 2015 Financial Performance Survey includes new data for ‘very high profit, high profit, average profit, and low profit/loss’ firms so leaders can see how their firms compare. P U B L I C AT I O N S

By JAMIE CLAIRE KISER Zweig Group Director of M&A Services

RESPONDENTS’ DEMOGRAPHICS One hundred three A/E/P and environmental consulting firms submitted valid questionnaires for Zweig Group’s 2015 Financial Performance Survey . 40 percent were Multidiscipline Engineering firms 22 percent were Architecture or Interiors firms 11 percent were Full-service Engineering or A/E firms 11 percent were Environmental Consulting firms 6 percent were Single-discipline Engineering firms 5 percent were A/E (primarily architecture) firms 6 percent categorized themselves as Other

It seems that, in 2014, the architecture, engineer- ing, planning, and environmental consulting in- dustry as a whole turned the corner from recover- ing from the recession to beginning a new and ex- citing growth phase – firms reported performance that reaches pre-recession levels in many of the metrics measured in Zweig Group’s 2015 Financial Per- formance Survey of Architecture, Engineering, Planning & Environ- mental Consulting Firms . The outlook for future perfor- mance is also encouraging. Global construction output, a main driver for architectural and engi- neering services, is projected to grow by more than 70 percent to $15 trillion by 2025, according to PricewaterhouseCoopers. The firms that survived the recession learned valu- able lessons about operating efficiently and finding creative ways to generate business. Lean business models, entrepreneurial thinking, and a growth cycle can all benefit the bottom line for firms in this industry. However, to achieve these bene- fits, firms need context, and that’s what the S ur- vey is all about. Did other A/E/P and environmen- tal consulting firms perform financially like yours last year? What segments or specialties held their own or improved? In what areas is your firm better or worse than its peers? The answers to these and many other questions can be found in the 2015 Finan- cial Performance Survey . The 2015 Survey tracks firms’ performance on nearly 100 indicators, including financial, personnel, and growth measures. Each datum is described in de- tail, and each section ends with a summary of the findings. Key financial measures are broken down for firms by region, specialty, size, growth rate, and client base. Each measure is quantified with actual mean, median, lower quartile, and upper quartile performance, meaning that an executive can com- pare his or her company’s performance to the best, worst, or mid-grade performers. Zweig Group made changes to the 2015 Survey that will allow readers to understand their firm’s per- formance in greater context than ever before. This year’s Survey includes a new field: profitability. For the first time, the Survey includes mean, medi- an, and lower and upper quartile performance for very high profit, high profit, average profit, and low profit/loss firms across all metrics. Zweig Group’s

26 percent had 25-49 employees

24 percent had 1-24 employees

20 percent had 100-249 employees

16 percent had 50-99 employees

10 percent had 250-499 employees

4 percent had 500+ employees

goal is help firm leaders benchmark their organiza- tions to the leading performers in all facets of op- erations. Readers should resist the urge to pat themselves on the back for “beating the average”: If you don’t want to be an “average” firm, don’t compare yourself to average performers. Comparing your firm’s key fi- nancial metrics to upper quartile performance lev- els can help you identify the performance gaps be- tween your firm and its best-in-class peers. Using the survey as a guide, firm leaders can identify op- portunities, set financial goals, and develop action plans to achieve these goals. Firms can use the Financial Performance Survey not only to target internal initiatives, investments, and im- provement efforts based on their best performing peers, but also to help determine whether their op- erational and financial performance metrics are moving in the right direction.

THE ZWEIG LETTER JULY 20, 2015, ISSUE 1112

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