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This paper is a financial analysis of several key parameters that affect the cost structure of design firms in the United States. Using results of surveys conducted over the past 15 years, we have examined the cost trends and profitability of design firms. The firms’ profitability is examined as a function of utilization and overhead rate and expense ratio. The impact of overhead caps imposed by public agencies and the reimbursement of CADD costs in public projects on the profitability of design firms are discussed. To evaluate these factors, the paper first discusses in detail the four elements of cost within the design services industry. These four elements are: direct salary costs, indirect salary-related costs, direct nonsalary costs, and general and administrative costs. These design costs are usually summarized and presented as labor, overhead, and direct nonsalary costs. A detailed analysis of the elements that comprise overhead and the key elements that affect overhead are presented. Profitability is then expressed in terms of the factors described, and the effect of overhead caps and nonreimbursement of CADD costs on the firms’ profit is quantified. [ABSTRACT FROM AUTHOR]

Increasing globalization is creating both challenges and opportunities for engineering and construction (E&C) companies. Many researchers have examined the drivers and key success factors that enable globalizing E&C firms to become truly global. However, although firms integrate recommended globalization tactics, they lack an approach to evaluate the effect of different tactics and strategies on their globalizing performance. This paper presents an index that enables firms to assess their globalizing performance in two dimensions: degree of global reach and degree of global integration. Data were collected from 15 E&C companies to internally validate the developed globalizing index. The globalizing scores of the 15 E&C companies with their international revenue ratios were then compared to externally validate that the international revenue ratio is positively correlated with the global reach score. This research fills an essential gap in the construction engineering and management literature by contributing a novel index for E&C firms' to measure their globalizing performance. [ABSTRACT FROM AUTHOR]