ASHRAE Journal - February 2015 - 46

Actual Net Fee Multiplier

2014

2012

2010

2008

2006

2.50

1980
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014

2.60

2004

2.70

2002

2.80

2000

Net Revenue Deficit

1998

2.90

1996

3.00

1994

3.10

18
16
14
12
10
8
6
4
2
0

1992

EBBT (Percent of Net Revenue)

3.20

1990

TECHNICAL FEATURE

FIGURE 3 Operating profits as a percentage of net revenues. Source: PSMJ's 2014
Financial Performance Benchmark Survey Report.

Target Net Fee Multiplier

FIGURE 2 Target versus achieved direct labor multiplier. Source: PSMJ's 2014

Billing Rate Trends

Financial Performance Benchmark Survey Report.

Total compensation reached a five-year high in the 2009-
10 time period but fell to a five-year low in the 2011-12 time
period for most positions/roles. While total direct compensation for the majority of the senior level roles (Chairman of
the Board, CEO, COO, etc.) has yet to recover to 2009 numbers, more production-focused positions/roles have generally increased and have exceeded 2009 (Department Head,
Senior Project Manager, and Project Manager).

Compensation is directly related to hourly billing
rates, which are intended to recover all design firm costs
(including direct labor and overhead) and provide for
profit. For example, if a highly billable Senior Project
Manager is paid $50 per hour (excludes labor burden or
fringes), and the firm's overhead rate is 160% on direct
labor, then the break-even billing rate would be $50 x (1 +
1.6) = $130 per hour; and a billing rate of $150 provides for
about 13% profit. Reimbursable expenses are recovered
from the client directly and not included in these billing

TABLE 3 Historical total direct compensation results.
2014

2013

2012

2011

2010

2009

Chairman of the Board

$201,392

$215,000

$212,066

$233,589

$250,000

$240,144

Chief Executive Officer

236,700

265,342

233,000

233,216

247,500

250,000

COO/Executive VP

206,560

203,913

221,933

224,133

246,500

231,061

Senior VP/Senior Principal

185,645

198,674

200,000

178,092

210,137

200,500

Other Principals/Partners

144,000

145,000

143,415

150,000

146,641

149,327

CFO/Director of Finance

159,968

175,000

184,538

175,905

170,226

171,290

Controller

100,000

100,807

101,109

96,000

97,000

100,500

Business Manager

64,745

78,972

78,630

82,994

95,000

77,845

Director of Administration

83,500

140,246

128,750

80,528

123,668

85,280

Director of Operations

137,750

146,000

137,510

149,740

154,686

150,000

Director of BD

119,000

135,229

120,800

108,768

119,724

178,500

Director of Human Resources

97,314

102,231

100,000

91,655

92,867

99,309

Director of Computer Operations

104,257

104,589

97,000

96,000

100,000

105,500

Branch Office Manager

123,513

125,521

125,377

118,000

128,608

130,742

Department Head

123,355

120,000

120,560

112,677

114,000

115,752

Senior Project Manager

103,537

102,000

98,315

98,000

95,554

97,500

Project Manager

82,035

78,285

77,000

76,000

75,000

73,883

Source: PSMJ's 2014 Management Compensation Benchmark Survey Report
46

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