This article summarizes the key takeaways from a recent PSMJ webinar featuring Unanet’s Lucas Hayden titled, “Hidden Costs, Lost Profits: Why AEC Firms Need Smarter Spend Management,” If you’d like to view the event in its entirety, view the full replay.
Imagine a project starting strong, with every member of the team motivated to succeed. Designs are on track, milestones are being met, and yet, below the surface, inefficiencies begin to mount. Overbudget spending, delayed approvals, untracked expenses, and missed savings quietly undermine profitability. These hidden costs accumulate, transforming promising projects into underperforming financial burdens.
This scenario is all too common in architecture and engineering (AE) firms. Fragmented systems, sluggish manual processes, and limited visibility into spending data make financial inefficiencies inevitable. But there is a better way forward. Smarter spend management offers a strategic approach to reducing waste, enhancing profitability, and empowering firms to thrive in a competitive market.
AE firms operate in a demanding environment. Economic uncertainty, inflation, pressure on margins, and supply chain disruptions create an uphill battle. Under these conditions, even minor inefficiencies can erode profitability significantly.
The most common challenges include:
The opportunity to create immediate value lies in addressing these inefficiencies head-on.
Smarter spend management promises a significant shift, unlocking profitability through a more modern framework that moves from reactive to proactive cost controls. By eliminating waste, accelerating processes, and leveraging real-time data, A&E firms can achieve the following outcomes:
Consider how $100,000 in unmanaged spending impacts a firm’s bottom line. To recover these losses at a 10% profit margin, an additional $1 million in revenue would be required. Reducing inefficiencies and oversights, instead of trying to offset them with more work, is the more sustainable solution.
With these improvements, firms can better align their operations, projects, and people for long-term success.
Efficient spend management relies on a structured framework. This strategy focuses on boosting visibility, maintaining proactive control, and integrating advanced systems with traditional workflows. It also cultivates deeper insights through automation and sophisticated analytics. Each of the five pillars of this approach plays a vital role in driving efficiency and profitability.
Gain real-time insights into corporate spending, from billable to non-billable expenses. Transparent financial data empowers every stakeholder to make informed, timely decisions.
Introduce spending limits, clearly defined approval workflows, and virtual corporate cards with automatic restrictions. These measures ensure compliance while simplifying spending processes.
Connect financial systems, project management tools, and accounting software to make operations seamless and eliminate silos. This is readily done through a project-based ERP.
Reduce repetitive tasks through policy-enforcing technologies, digital receipt capture, and automatic data categorization. This decreases manual efforts while increasing operational accuracy.
Utilize interactive dashboards to track vendor performance, identify spending patterns, analyze budget variances, and pace firm performance against industry benchmarks.
When implemented together, these pillars form a scalable, data-driven approach to spending that streamlines operations and enhances productivity.
A structured roadmap provides firms with actionable solutions that can be implemented today to drive immediate results.
These strategies not only prevent hidden costs from accumulating but also create an environment of proactive financial management within the firm.
Transforming spend management from an inefficient liability into a competitive advantage is a multi-step process. It begins with quick wins but also requires sustained innovation. A suggested roadmap includes the following phases:
This crawl-walk-run methodology ensures firms maintain momentum while slowly embedding smarter practices into their workflows.
By addressing inefficiencies and adopting smarter spend management, firms can achieve measurable results quickly. Margins become wider, cash flow is optimized, and collaboration intensifies as siloed workflows are replaced with integrated systems and automation.
AE firms have a unique opportunity to turn cost control into a core strength. By leveraging purpose-designed solutions, firms can move beyond firefighting inefficiency and overspend, and position themselves for growth in a challenging market.
Explore intelligent, data-driven solutions to ensure your firm operates seamlessly and profitably. The right tools will help you save, scale, and succeed with confidence.
Interested in learning more about how smarter spend management can help your firm? Reach out to speak to a Unanet representative today.