ASHRAE Journal - February 2014 - 14

SPECIAL REPORT

longer lead times tends to buffer the A/E design
industry from economic downturns. However,
the recent recession lasted longer and proved
more severe than the past two downturns. The
goal for many firms was to keep as many staff
on board as possible while also making sure the
firm could ride out the recession.
Annually, for the past 31 years, PSMJ
Resources, Inc. has conducted a management
compensation survey that solicits data from
both engineering and architectural firms for 18
management positions, from chairman of the
board to junior project manager. Historical Total
Compensation is presented in Table 2 for the
past five years. It's important to note that compensation rates generally increase with firm
size, so use the information in the table with
caution. The table is presented to demonstrate
trends only, and for more detailed information
a full compensation study would be required.
Total compensation generally reached a fiveyear high in the 2009/2010 time period and a
five-year low in the 2011/2012 time period, for
most positions. We see mixed results for 2013,
for example, total compensation for CEOs,
senior project managers, and junior project
managers exceeded 2009 results, but many
other positions have not, such as other principals and director of operations.

Billing Rate Trends

TABLE 2 Historical total compensation results (median).
2013

2012

2011

2010

2009

CHAIRMAN OF THE BOARD

$215,000

$212,066

$233,589

$250,000

$240,144

CHIEF EXECUTIVE OFFICER

265,342

233,000

233,216

247,500

250,000

EXECUTIVE VICE PRESIDENT

203,913

221,933

224,133

246,500

231,061

SENIOR VICE PRESIDENT

198,674

200,000

178,092

210,137

200,500

OTHER PRINCIPALS

145,000

143,415

150,000

146,641

149,327

DIRECTOR OF FINANCE

175,000

184,538

175,905

170,226

171,290

CONTROLLER

100,807

101,109

96,000

97,000

100,500

BUSINESS MANAGER

78,972

78,630

82,994

95,000

77,845

DIRECTOR OF ADMINISTRATION

140,246

128,750

80,528

123,668

85,280

DIRECTOR OF OPERATIONS

146,000

137,510

149,740

154,686

150,000

DIRECTOR OF QUALITY CONTROL

143,364

128,750

156,826

182,000

178,500

DIRECTOR OF BUSINESS DEV.

135,229

120,800

108,768

119,724

130,523

DIRECTOR OF HUMAN RESOURCES

102,231

100,000

91,655

92,867

99,309

DIRECTOR OF COMPUTER OPS.

104,589

97,000

96,000

100,000

105,500

BRANCH OFFICE MANAGER

125,521

125,377

118,000

128,608

130,742

DEPARTMENT HEAD

120,000

120,560

112,677

114,000

115,752

SENIOR PROJECT MANAGER

102,000

98,315

98,000

95,554

97,500

JUNIOR PROJECT MANAGER

78,285

77,000

76,000

75,000

73,883

3.20

Compensation is directly related to hourly
3.10
billing rates. The billing rates are intended to
3.00
recover all design firm costs (including direct
labor and overhead) and provide for profit.
2.90
Reimbursable expenses are recovered from the
2.80
client directly and not included in these billing
rates. If compensation rates exceed what can be
2.70
recovered in billing rates, then profits may be
2.60
negatively impacted.
2.50
Many are familiar with the 3.0 target direct
1978
labor multiplier which held steady for decades,
FIGURE 3
meaning that most firms at the end of the day
are targeting fees that are triple their direct
labor costs in establishing their billing rates. The target
multiplier began to rise in 2005 and has remained at or
near 3.10 since 2007. However, as shown in Figure 3 many
firms' achieved direct labor multiplier is not meeting
14

ashraE JourNal

ashrae.org

FEBRUARY 2014

Net revenue Deficit

target Direct Labor Multiplier
Achieved Direct Labor Multiplier

1985

1990

1995

2000

2005

2010

2013

Target vs. achieved direct labor multiplier (net revenues deficit).

or exceeding their target multiplier, which results in
reduced net revenues (net revenues deficit) and an overall reduction in profit. In 2013 the results are beginning
to see improved performance and the market is either

ASHRAE Journal - February 2014

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