The dog days of summer are here, and for Practice Matters readers this means one thing: It’s time for the release of RECORD’s Top 250 Firms list. For the uninitiated, the list ranks firms according to last year’s revenue, as reported to our sister publication Engineering News-Record.

Last July we marveled at the fact that while the recession was already well under way during 2008, total revenue for the profession was up 9 percent, from $11.5 billion to $12.5 billion. Waiting to find out how much revenue would decline as projects were cancelled and backlogged work ran out has been a bit like watching a fat man start a swan dive off the high board: You want to avert your eyes so as not to see what happens when his flabby midsection smacks the water, but you look on and hope for a graceful landing. It would have been better to turn away. The combined revenue for the Top 250 firms in 2009 totalled $10.2 billion (B), $2B less than the year before. As difficult as it is to comprehend the evaporation of so much money from the profession’s income stream, growth over the past half-decade was phenomenal, and undoubtedly unsustainable. In 2005, income for the largest 25 firms on the list was $3.3B. By the end of 2008, that had increased a whopping 94 percent, to $6.4B. In any industry that would be a huge gain. In 2009, their income declined to $5.1B.

These firms bring in about 50 percent of the Top 250’s total revenue. Thirty percent of their work came from the Middle East, China, and elsewhere in Asia. While the big 25 suffered a $800 million (M) decline in domestic revenue last year, from $4.4B to $3.6B, the amount of revenue from foreign work only decreased by $400M, from $2.0B to $1.6B.

Revenue from foreign sources doesn’t help smaller firms much — 70 percent of the Top 250 list made less than $10M in offshore revenue last year. And in fact, total income for firms ranked between 100 and 150 on our list already peaked in 2007, coinciding with dramatic drops in all of the developer-driven building types: retail, offices, hotels, and multifamily. If your firm specialized in these sectors, you probably did not land softly — average revenue for firms ranked between 151 and 200 on our list, whose income starts at $8M and goes up to $16M, was down 24 percent last year. But, firms that ranked between 201 and 250, whose revenue ranges between $3.7M and $8M, only saw their revenue decline by 12 percent.

Life is going to continue to be tough for architecture firms, particularly those that depend on developer work. But in mid-May, the AIA said its April New Projects Inquiry Index hit 59.6. Any number over 50 indicates surveyed firms saw an increase in project inquiries compared to the previous month. Kermit Baker, the AIA’s chief economist, said noncommitally, “It is quite possible we will finally see positive business conditions in the foreseeable future.” That doesn’t drip with enthusiasm, but don’t jump yet.

Editor's Note: We began publishing data on the Top Firms in 2005. This year for the first time we have created tables that put this data in historical perspective. Please click the link below to view these findings.

View The Table