Thursday’s 6pm ET Zoom session is titled, “Profitability”. You’ll take the first five minutes of class to answer the question alone, but if you would like to get a head-start on that, here is the assignment.
An architecture firm specializing in forensic analysis of design and construction failures is interested in growing but has more work opportunities than it can accept. The firm assigns each forensic analysis project to a team of three people: one licensed architect as the team leader, one not-yet-licensed “architectural designer,” and one support staff person. There are simply not enough three-person-teams to grow into the client demand, and the limiting constraint is the number of licensed architects in the firm. The firm employs numerous not-yet-licensed “architectural designers” with sufficient experience to be promoted to team leader, but the nature of their work and its reputation among clients requires that team leaders be licensed. The firm enjoys a 68% average utilization ratio, a 3.5 direct salary expense multiplier, and a 20% profit margin. The three team members are billed to the client as follows.
Licensed architect team lead: $115/hr
Not-yet-licensed “architectural designer”: $85/hr
Support staff: $65/hr
If the firm can get six of its not-yet-licensed “architectural designers” licensed, and therefore add six new busy teams to its roster, how much more profit will the firm generate annually. Assume 52 working weeks per year, and 40 hours per working week.
It’s free for everyone, so join us. You’ll increase your odds of passing the exam. . . Plus, it’s fun.
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