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Architecture firm business consultant Rodney McNabb has led an A&E firm since 2005. Next Phase A&E helps owner-led architecture firms with a core team of 3 to 20 full-time equivalents fix how they price, bill and staff their work.
Most owner-led architecture firms lose margin in the same places:
Fee proposals priced from memory instead of a documented method
Scope changes performed before the client approves them
Invoices sent after the milestone they bill
Different WIP definitions for the owner, the project manager and the accountant
A utilization number with no stated numerator or denominator
Request a meeting. In one free call, we'll show you which of these costs your firm the most.
Fee proposals and profitability: Price each fee proposal from a documented method with costed scopes and review checkpoints, then see profit by project.
Financial management: Schematic Design reviews your financial statements, WIP schedule and billing milestones. Design Development builds one WIP and billing view everyone reads the same way.
Architecture firm KPIs: We define a few measures, such as your architecture firm utilization rate, with a stated numerator and denominator.
Change orders: A written step your project managers follow before extra work starts, so scope changes get approved and billed.
Practice management: We turn the fee-proposal template and billing workflow into a staff-run SOP.
Your firm already prices, schedules and bills by phase. AIA Document B101 sets the standard sequence: schematic design, design development, construction documents, procurement and construction. Our engagements run on the same phases, so scope, deliverable and finish are clear before you sign.
Phases also hide lost revenue. At his own firm, Rodney found finished phases nobody invoiced, because the records never showed which were complete. A phase-based billing view closes the gap.
Architecture firm KPIs work only when everyone calculates them the same way. Start with five:
Utilization rate: billable hours divided by available hours
Project profit: fee earned minus labor and direct costs, by project
Net billings per employee: net billings divided by total staff
Backlog: signed fees not yet earned, in months of work
Days to invoice: days from a billing milestone to the invoice
For a benchmark, the AIA 2024 Firm Survey key findings reported average profitability of 13.2% of net billings and $143,000 in net billings per employee for 2023.
Our guide walks through how to calculate your architecture firm utilization rate.
The Schematic Design diagnostic reviews your fee proposals, billing milestones, WIP schedule and staffing, then gives you options for the first system to build. Design Development builds the one you pick, such as a fee-proposal template with costed scopes. Construction Documents writes the procedure and trains your process owner.
See every phase on our A&E consulting services page, and how fixed-fee A&E consulting compares with other advisors. Not ready to talk? Take the 7-Minute Firm Health Check.
Planning to sell the firm or hand it to partners? See A&E firm succession planning to get your books and procedures ready before the valuation.
Own an engineering firm? See our engineering business consultant page, or see all the firms we serve on business consulting for architecture and engineering firms.
What does an architecture firm business consultant do?
An architecture firm business consultant reviews how a firm prices, bills and staffs its work, then builds the methods and procedures to improve margin and cash visibility. Next Phase A&E does this in fixed-fee phases named after architectural project phases.
What is an architecture firm utilization rate?
Most firms divide billable hours by available hours. Some divide by total paid hours instead, so we write down the numerator and denominator before we measure.
What is a good utilization rate for an architecture firm?
Firm-wide, many A&E firms land near 60%. The latest Deltek Clarity study reported billable labor cost slightly under that level. Targets by role matter more: technical staff run 80% to 90%, project managers 65% to 80% and principals 40% to 60%. See how to calculate your architecture firm utilization rate.
How should an architecture firm price fee proposals?
From a documented method: estimated hours by phase and role, costed at known rates, with review checkpoints before the proposal goes out. A written method lets someone besides the owner price work and compare the fee with actual effort afterward. Read how to price an architectural fee proposal by phase.
Which KPIs should an architecture firm track?
Start with utilization rate, project profit, net billings per employee, backlog and days to invoice. Write down how each one is calculated, so the owner, the project managers and the accountant read the same number.
Which architecture firms do you work with?
Owner-led architecture firms with a core team of 3 to 20 full-time equivalents, including owners, employees and recurring contractors.
Do you provide architectural services?
No. Next Phase A&E provides business advisory only. We do not practice architecture, and we offer no accounting, legal or tax advice.