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A/E Industry Trends in 2021: New Contracts, Net Billing, Backlog and More

Lior Schnabel is the Managing Partner of Precise, a company that provides financial management and control services for architectural and engineering firms across the USA and Europe. This article was written and researched with Yotam Kedem, who is a partner in Precise and the head of their USA office. 

We are frequently asked by our clients “what’s happening in the A/E industry”.

We therefore decided to collect and analyze the data from nearly 50 A/E firms based in the New York Tri-State area.
We decided to analyze five major criteria that reflect the industry trend: New Contracts, Net Billing, Net Revenue, Backlog, and number of Professional Employees.

The first quarter that was measured was the 1st quarter of 2019 and it will serve as the index. Here is the results of our surveys leading up to the period ending on June 30th, 2021:

Total Amount in New Contracts presents the total value of new work that was signed in each quarter.

Total Amount in New Contracts

With a 45% decrease compared to the initial index, Q2 2020 was the lowest quarter since the beginning of the survey. This may be due to the high level of uncertainty at that time — the onset of the COVID-19 pandemic — regarding funding planned projects, as well as starting new ones. Beginning in Q3 2020, we see a constant increase quarter over quarter; Q2 2021 is the highest we’ve seen so far (over 10% from the initial index).

Net Billing shows actual work that was invoiced.

Net Billing

While the pandemic hit in Q1 2020 (mid-March), firms were still able to bill for the work completed during that quarter. We therefore saw the substantial 20.1% drop in the following quarter (Q2 2020). With a drop of another 5.1% from Q2 2020, the lowest billing point was in Q3 2020. We can attribute this to the lack of New Contracts during Q2 2020. Shortly after, in Q4 2020, we can see that there was already a steady increase in Net Billing, including a 10% increase in Q2 2021 alone, which rivalled pre-Covid levels.

Net Revenue measures the net cash revenue. 

Net Revenue

Although the pandemic was in full force during Q2 2020, there was only a 4.7% decrease from the index figure (and 11.2% from Q1 2020). This is due to the high billing figures in Q1 2020 along with intense collection efforts. The full cash effect was felt in Q3 2020 with a 23% drop from the initial index. However, we can see a steady increase starting in Q4 2020 while figures are still below pre-Covid levels, which is similar to the trend in the Net Billing. It is also important to emphasize that Net Revenue figures only include revenue streams from projects/clients (and doesn’t include any funds such as grants or PPP).

Backlog is the remaining fees/balance in contracts in the active projects in the firm (signed work that wasn’t billed yet). 


When the Covid 19 crisis first hit at the end of Q1 2020, the index went down to -12% at Q2 and Q3 2020. Since Q4 2020, the backlog index is on a constant increase and as of the end of Q2 2021, we see the highest point of backlog since we the beginning of the survey (Q1 2019).

Professional Employees is the number of technical, billable employees in the firm, and does not include admin, IT, accounting or marketing staff. 

Number of Professional Employees

Due to the pandemic that started mid-March 2020, we saw a substantial drop of 12.5% in the number of professional employees in the industry during Q2 2020 (correlating with the backlog trend). This number stabilized and remained steady until the end of 2020, which can be attributed to Federal, State and City grants and loans that were given to businesses to help and assist with the pandemic struggles. Even though there was an increase in backlog at the end of 2020, firms were still hesitatant in hiring. With that being said, during the first half of 2021, there was an increase of 8.4% in Professional Employees. While it’s not back to pre-Covid figures just yet, the trend is upwards.

Specific Sectors

Although we can see that the index is picking up in all criteria, the situation varies significantly between different firms and sectors.

The private residential sector, specifically single-family houses, has been fairly active and has continued to yield work since the early days of the pandemic and in recent months.

As for other housing projects, there has been a slow resurgence in recent months — although not remotely close to private residential that experienced a substantial surge.

As for public work, this sector has slowed substantially during the pandemic with ongoing projects stopping and new ones not starting. However, it seems like the wheels of the new administration have started turning and we see more RFPs coming out while public projects are being funded again.

As an example, New York City and State agencies like NYCHA, EDC, DOT, etc. have been active and some work already started on contracts that were awarded.

The Commercial and Retail sector was also very slow during the early days of the pandemic. However, the resurgence started earlier on, especially during 2021. As we are getting closer to the end of the year, some retail firms are aggressively pushing some schedules aiming to be open by the holiday season.

The hospitality sector was most likely the sector to take the biggest hit during the pandemic. Although firms in this sector are more hopeful now that there are new inquiries and even some new projects starting, it still substantially slower compared to other sectors. This may vary between States and Countries, depending on the pandemic status in those places.

Precise will continue to track the numbers every quarter and report the industry trends accordingly.

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Top Image: Business Oasis by FTA Filippo Taidelli Architetto

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