How top AEC firms use their data to stay ahead
One thing the top AEC firms have in common? They gain an edge by putting their data to work. Read on to learn how.
What metrics are top AEC firms tracking?
Uncover what the top AEC firms are tracking to evaluate their performance across business development, project management, and finance.
Unanet recently released its 2024 AEC Inspire Report. In this blog series, we’ll explore the topics and themes it covers and how your AEC firm can use this information to gain a competitive advantage.
As an architecture, engineering, and construction (AEC) firm, you understand the importance of measuring your firm’s success. But how can you know if you're tracking the right metrics to give you the most accurate picture of where you stand?
The 2024 AEC Inspire Report sheds light on the AEC firm performance metrics top firms are tracking to ensure success across the key business areas of business development, project management, and finance and accounting.
Business development
In the AEC industry, the metrics around business development steer strategic planning and operational success. The report emphasizes that bids submitted and project type are the most frequently tracked metrics. These are pivotal to calculating growth indicators such as win rate and capture rate. For smaller firms, tracking project type is especially beneficial as it helps identify expanding sectors, aiding in strategizing for diversification and growth.
Despite being the least tracked, skill set utilization garners significant interest. This reflects the industry's rising awareness over the importance of recruiting and retention. Firms want to assess their workforce capabilities, aiming to reveal and bridge any skills gaps.
Additionally, there is a growing enthusiasm for more detailed pipeline views. Firms aim to track capture stages and new prospect conversions closely, recognizing client satisfaction as essential in the relationship-driven AEC economy. Building and maintaining personal relationships remain the cornerstone of discovering new opportunities.
Project management
Project management metrics in the AEC sector are fundamentally tied to financial stability. Firms are aware of their top-line revenue and bottom-line profit, using these figures to form a comprehensive view of financial health. The report indicates a strong interest in variance metrics and project burn rates. These indicators serve as early warning systems for project performance and resourcing issues, allowing for timely interventions.
For smaller firms, tracking project revenue, profitability, unbilled work, and backlog is common practice. These metrics provide insights into cash flow and financial health. On the other hand, midsize and larger firms focus on average billing rates, earned value, project spend variance, and burn rate. These metrics are vital for managing risks associated with larger, more complex projects.
Finance and accounting
In finance and accounting, the metrics tracked by AEC firms mirror their concerns over financial performance and operational efficiency. According to the report, about three-quarters of respondents monitor profit and gross revenue, underscoring a unified approach to maintaining financial health.
For small companies, the focus is on immediate financial indicators such as profit, gross revenue, backlog, and accounts receivable collection days. These metrics are essential for managing cash flow effectively. In contrast, midsize and larger firms are more inclined to track Days Sales Outstanding, return on overhead, and return on working capital assets. This reflects their strategic interest in optimizing operational efficiency and resource allocation.
Understanding and leveraging these key metrics allows AEC firms to better navigate the complexities of their industry and position themselves for future success. As indicated by the 2024 Inspire Report, focusing on the right data points is essential for sustaining growth and maintaining a competitive edge in a rapidly evolving market.
Utilizing the right metrics not only supports AEC business development strategies but also aligns with AEC project management best practices and AEC finance and accounting solutions. This comprehensive approach ensures that firms remain competitive and poised for future challenges.
In our next post, we’ll take a closer look at the role of data in unlocking the power of AI. Until then, download the entire 2024 AEC Inspire Report here.
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