Why Tech-Forward AEC Firms Should Feel Optimistic About the Future

For many architecture, engineering, and construction (AEC) firms, business is looking up. According to research from Unanet’s AEC Inspire Report 2022-2023, an annual benchmarking survey connecting with nearly 400 AEC leaders, 43% of AEC executives surveyed reported profits of at least 20% over the past 12 months.  

Healthy profit margins in the past don’t always translate to financial success going forward, however. AEC firms still face a multitude of challenges as they attempt to adapt and grow.  

The findings from the AEC Inspire Report uncovered why many AEC executives are optimistic going forward, but also what’s creating headaches for them. Let’s take a closer look at why many firms can be optimistic, what keeps them awake at night, and why firms that embrace technology to establish better project visibility are best suited for the future.   

There are reasons for your firm to be optimistic – if you are tech-forward 

It’s more critical than ever for AEC firms to adopt a tech-forward approach to their business. Consider the following statistics from the AEC Inspire Report:  

• 24% of tech-forward firms have no issues leveraging data 
• Half of tech forward firms reported recruiting and staffing levels improved since the pandemic.  
• Profitability levels for tech-forward firms, both past and projected, are up
• Half of the tech-forward firms found their project and resource management processes “very mature”
• 34% of tech-forward firms report a capture rate of higher than 50% - contrast this to 21% for tech-static firms.  

Leaning on a tech-forward approach clearly pays off. But many AEC firms – even those that are tech-forward – still face formidable challenges.     

Issues that keep AEC firm executives awake at night 

The executives surveyed also shared their greatest concerns for their businesses heading into the future. The issues that concerned them the most included:   

• The general state of the economy 
• Recruiting and retention 
• The cost of doing business 
• Maintaining operational efficiency 
• Contract competition 
• Ongoing challenges associate with the pandemic 
• Establishing and perpetuating a strong cybersecurity posture  

To stay ahead of these challenges, AEC firms need data they can use to examine their own internal metrics. Among the most tracked metrics for these firms are gross revenue, gross margin, and overhead costs. Project profitability, Project revenue, and project completion are other vital metrics tracked.  

What’s even more telling is what firms aren’t tracking but believe they should be. Burn rate is one metric many firms would like to track but don’t. Many companies track employee certification but fail to follow up tracking skill set usage. While more than a third of firms report having mature project and resource management processes, a third don’t know whether they’re completing projects on time or on budget.  

What these obstacles have in common is that they refer to an organization’s ability to gain insight into their project and resource data and use that effectively.  

Differentiator for AEC firms: greater project visibility enabled through a tech-forward approach  

When it comes to growing your AEC business, you can’t improve what you don’t know. By using tools that provide enhanced visibility into metrics, tech-forward firms can capitalize on positive trends while getting ahead of potential hurdles to profitability and success.  

Adopting a tech-forward approach with enhanced project visibility provides insight into the metrics that help keep projects on-time and under-budget. It helps alleviate many of the major pain points listed above by maintaining awareness of the data that helps improve both resource and project management.   

One example of how increased project visibility can help firms succeed is the establishment of reliable and accurate metrics, leading to more informed decision-making. When firms track key variance metrics such as scheduled versus actuals and estimate to complete, they find themselves in a better position to answer questions like, ‘Will my project be successful?’ or “When do we need to hire next?’   

AEC firms can sleep soundly when they implement tech solutions that empower them with the right information. It allows them to stay ahead of their competitors with data-driven insights they can convert into higher profitability.  

For more on what top AEC executives are thinking, download a free copy of the AEC Inspire Report today. The next part in our series will dive into understanding your capture rate and why it’s such a vital metric to track.