Benchmark your firm against the global A&E industry and discover the top KPIs for tracking performance

Posted by Deltek on February 16, 2021

TwitterTweet it:'The most effective KPIs to measure will always be the ones tied closely to your strategic objectives.'

The Deltek Clarity Architecture and Engineering (A&E) study has been assessing the state of the industry in North America for over 40 years. Now, we’ve extended into the European and APAC regions.

We asked firms about how they performed throughout the 2019 fiscal year. Then, we asked them what KPIs they use to stay on target and track improvement.

So, what are the key metrics used to measure success in the A&E industry? How do different regions compare? And what are the top barriers and facilitators to meeting these KPIs?

How does your firm compare?

We asked firms from APAC and European markets five questions to benchmark their performance:

  1. What percentage of projects were on/under budget?
  2. What percentage of project were delivered on/ahead of schedule?
  3. What was your average utilization rate?
  4. What was your average overhead rate?
  5. What was your employee turnover rate?

In key areas, no region is miles ahead of the others. For other questions though, we see significant differences.

For example, average utilization rates across Europe and APAC are similar, while in the Nordic region, firms report themselves as having higher rates. None of the organizations surveyed in Denmark, Sweden and Norway reported a utilization rate below 20%, and Danish firms stated the highest overall, with nearly two thirds of firms having a utilization rate between 61 and 100%.

Average overhead rates, however, see greater variety across regions and countries. European firms reported the highest overhead rates with a third reporting rates of 151-180%. While 70% of firms in APAC report rates of 91-120%, only 40% of European and Nordic regions say the same. The majority of New Zealand and Singapore firms (87% and 79% respectively) report rates at this level. Meanwhile, 2% of Nordic firms report rates between 1 and 60% – the only region to report rates this low.

Chart showing KPIs tracked globally by Architecture and Engineering Firms

 Net revenue, profit and average collection period top the KPI list

These benchmarking figures give an overview of how other A&E firms are performing, and how your organization compares. But while these are useful indicators of overall performance, there are more granular KPIs firms use to track performance in key strategic areas. Every organization has different goals and processes, so how they measure success is different too.

So, we asked respondents what KPIs they measure. And while the list is extensive, there are a few commonalities. Predictably, net revenue and profitability are measured the most, with 92% of firms tracking each while 74% of firms track average collection period.

We asked Gerry Doyle, President of Consult Australia, if this aligns with his experience.

“Yes, this does align with what we see,” he told us. “Although, I’m surprised that the average collection period is only measured by 74% of respondents – I would have expected this to be higher.”

In comparison, only 54% of organizations globally track client satisfaction. Interestingly 70% of Danish firms report tracking it and it’s not the only time that they take the lead. Of all the KPIs listed, they track an average of 74% - more than any other country.

In our conversation with Gerry, he was able to shed light on why so few organisations track client satisfaction.

“We still see this as important,” he told us. “But it’s less important as a business metric than it previously was. This is driven by a move to client experiences and relationship management, so the measure of client satisfaction itself is less important due to the constant connection.”


 

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Schedule variance and value management: less frequently measured, but still important

Just as there are some KPIs tracked frequently, there are some that fewer firms look at. Schedule variance is measured by 36% of firms, while earned value management is tracked by only 33%. Interestingly, a significant proportion of Swedish firms report tracking value management, with 60% measuring it.

These differences between firms and regions only go to show the variety of KPIs tracked around the world. While it’s useful to see the kinds of metrics other businesses are focusing on, the most effective KPIs will always be the ones tied closely to your strategic objectives. But, if you are looking to better track your KPIs and benchmark your firm, but don’t know where to start, Gerry has some tips on key metrics.

When asked what KPIs he sees built environment practice’s using to stay on target and track improvement, Gerry listed revenue, margin, staff utilization, WIP and debtor days, staff turnover, work completed, and client satisfaction.

The barriers to success – and the facilitators

Setting up the right KPIs is important. But at some point you have to start improving the numbers you’re tracking. And whether your firm is looking to improve profitability, cost variance or the percentage of employee turnover, there will likely be hurdles – and facilitators – along the way.

Interestingly, collaboration is ranked as a top barrier to meeting KPIs – and a top facilitator. Of the firms surveyed, 20% say ‘limited cross-functional cooperation’ is the top challenge in meeting their KPIs. Notably, only 14% of Nordic organizations say this is their biggest problem – compared to 25% of firms in the APAC region. In contrast, 21% of firms rank ‘ample cross-functional cooperation’ as their top facilitator. A quarter (26%) of firms in the European region put it in the top spot, but only 17% of APAC firms.

We asked Gerry for his take on these results, and if there are any other barriers to achieving KPIs that weren’t mentioned. “We see collaboration as absolutely critical, so this result isn’t at all surprising,” he said. “Another major barrier we see are contractual relationships, with things like payment terms impacting working capital, and risk provisions impacting projects and profitability.”

The facilitator ranked number one by the most firms overall, however, is ‘strong project monitoring’. A quarter of all firms (24%) globally rank it as their top facilitator, although within the APAC region there is some variation. A third (30%) of New Zealand firms position it as their top facilitator, compared to only 16% of firms in Singapore.

Meanwhile, 17% of firms see ‘informal processes’ as the biggest barrier to meeting KPIs – with 42% ranking it in their top three. Interestingly, more firms in the Nordics (26%) consider this their biggest hurdle than in any other region.

Get the full survey findings

With the right metrics, you can identify what’s working, and tailor your strategy to deliver the best results. But first, you need to know what areas to improve.

You can find out how your company compares to other firms around the world, and get more insights into the KPIs your peers are using in the full Europe and APAC Clarity Report.


 

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