Most of the hourly billing rates have increased again in 2009. This year’s results indicate that the overall average of billing rate changes increased 8%. The median change in overall billing rate changes was 5%, with a maximum increase of 29%.
Billing rates for managers and senior project technical positions (project engineer and project architect) reflect an increase from last year (median increase of this subgroup of 8.7%, mean increase of 7.8%), and rates for the mid-level positions (architect, senior engineer, and intern architect) also increased (median increase of 4.2%, mean increase of 6.3%). These across-the-board increases in light of the current economic downturn indicate that firms may already have projects under contract and were not yet feeling the full effects of the recession.
Even with the current economic slowdown, overall billing rates have increased this year, and most engineering and design management and staff titles are billing at their historically highest levels.
Not all design firms directly bill for all types of typical reimbursable expenses and outside consultant fees. In addition, many do not use the same markup factors when they do. Thus, performing pricing comparisons using only labor estimates and the individual billing rates to perform a project (which do not explicitly account for how reimbursable expenses are recovered) can be very misleading.
Most firms report the ability to bill for all their typical reimbursable expenses incurred by the project but fewer firms are including a markup on outside consultants’ fees. Firms that do not include a markup on outside consultants are willing to accept no compensation for these additional risks of managing and being responsible for the work of their consultants — a very poor risk-reward tradeoff.
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