Full Sail Partners Blog | Deltek Clarity Report

Every year, the Deltek Clarity A&E Industry Study gives architecture and engineering firms something concrete to work with: real data from real firms about what's working, what's stalling, and where the industry is heading. The 47th edition surveyed 896 firms of all sizes and types, and the throughline is clear. This isn't a market that rewards guessing or going through the motions. The firms pulling ahead are the ones making intentional, disciplined decisions at every level of the business.

Nowhere is that shift more visible — or more urgent — than in the Financial Management data.

The mood has changed 

For the first time in several years, increasing profitability displaced finding and retaining qualified staff as the top financial challenge, named by 54% of firms. Talent pressures didn't go away — 49% still list them — but financial pressure moved to the front of the line. That's a meaningful signal. It tells us that firms have shifted from "how do we grow fast enough to meet demand" to "how do we protect what we built."

The numbers back it up. Operating profit on net revenue fell to 16.7%, down 4.7 percentage points year over year. Revenue backlogs contracted sharply — from 9.0 months to 6.3 months. Firms are still profitable by historical standards, but the conditions that produced record performance over the past two years are moderating. The margin for error is narrowing.

The firms navigating this best aren't chasing volume. They're being deliberate — about which projects to pursue, which clients to deepen, and how they price their work. That kind of intentionality doesn't happen by accident. It requires real-time visibility into the data that drives those decisions.

What the utilization number is actually telling you

The median utilization rate fell to 58.9%, down 2.2 percentage points from 61.1% the year before. That drop was felt across every firm segment, with large firms taking the steepest hit — falling from 62% to 58%.

Here's something important to understand about how Clarity measures utilization: it's calculated in dollars, not hours. Specifically, it's the cost of labor charged to projects divided by the total labor cost of the firm. That distinction matters — a lot.

A decline in utilization doesn't mean your people are doing less. It means a smaller share of your total labor spend is going toward billable work. The hours are still being logged — but more of them are landing in business development, internal initiatives, training, overhead, or other non-billable categories. When utilization drops, it's often a sign that the work mix inside the firm is shifting.

That shift is likely to accelerate. As AI tools compress the time required for technically complex but repeatable tasks — calculations, specifications, drawing revisions, report drafts — billable technical work gets done faster. That's good for delivery. But it also means more hours open up, and where those hours go matters enormously for the financial picture. If they flow into overhead and non-billable activity rather than additional billable scope, utilization drops further. If they flow into higher-value strategic work that commands better pricing, the firm comes out ahead.

The firms that will manage this well are the ones tracking it in real time. That means understanding their utilization not just at the firm level, but by project type, role, and team — and course-correcting before it shows up as a problem in the year-end numbers.

The compounding pressure of labor cost and overhead

Declining utilization doesn't exist in isolation — it connects directly to two other metrics that are moving in the wrong direction at the same time.

Total labor cost per employee rose to $119,511, up 3.6% from the prior year. Gross wages per full-time equivalent approached $100,000 for the first time, up 5.1%. Firms are spending more on their people — which makes sense in a competitive talent market — but they're converting less of that spend into billable work.

The result: the overhead rate hit a new 10-year high of 161.3%, up 1.3 percentage points. The math is straightforward. When fewer labor dollars are directed toward billable projects, more costs get absorbed into overhead. And higher overhead compresses the margin available for profit — even when pricing holds steady.

Together, these three metrics — utilization down, labor cost up, overhead up — describe a firm that is spending more to generate each billable dollar. The firms that recognize this dynamic early and act on it have options: adjust project selection, protect billable time more aggressively, improve pricing, or find ways to convert non-billable overhead hours into billable capacity. The firms that miss it until year-end have fewer.

Where firms see their greatest growth opportunities

Given the financial pressure, you might expect firms to be in retreat mode. The growth opportunity data tells a different story — but it's a story about targeted investment, not broad expansion.

Firms ranked investing in project managers and project management first, at 27%. Small and medium-sized firms leaned into this most heavily (30% and 28% respectively), which makes sense: PM capability directly drives project margins, billing accuracy, and client satisfaction. A financially literate PM who understands how scope changes affect profit is one of the highest-leverage investments a firm can make.

Growing your brand and optimizing resource allocation tied for second, each at 19%. Those aren't vanity goals — they reflect the strategic reality of a tighter market. Brand visibility matters more when you can't afford to chase every pursuit. Resource optimization matters more when you can't hire your way out of capacity constraints.

One divergence worth noting: large firms ranked mergers and acquisitions as their top growth opportunity at 33%. The strategic acquisition play is increasingly how larger firms expand without relying on organic growth alone — and the data on firm valuations supports it. The share of firms that completed a valuation in the past two years rose to 57%, up 6.5 percentage points, with large firms leading that trend significantly.

The throughline across firm sizes is doing more with what you have. That requires better data, tighter processes, and systems that give leaders the visibility to make smarter decisions faster.

Reading the revenue mix: clients, projects, and contracts

The revenue composition data in this year's Study is worth spending time on — it points to where the industry is moving and, by extension, where firms should be positioning.

On the client side, private-domestic clients remained the majority at 56% of revenue. The most notable shift was public-private partnerships, which rose six percentage points to 32% — continuing a multi-year trend as firms gravitate toward more stable, structured funding sources. Federal revenue declined four percentage points to 11%, consistent with broader uncertainty around federal funding priorities.

On the project side, transportation stayed at the top at 25%, while residential fell two percentage points and water/wastewater/stormwater declined five points. The real story is in the growth categories: energy and power rose to 18%, and data centers debuted as a new category at 10% — reflecting the surge in AI infrastructure investment driving demand across the country. For firms not yet active in these markets, the window to establish a track record is open but narrowing.

On the contract side, fixed-price contracts remain dominant at 57% of revenue, and the overall mix held remarkably stable. The Study flags an important nuance here: contract type is often driven by client preference, especially in public-sector work. But as cost pressures build, firms may want to evaluate whether their current contract mix adequately protects against the margin risks the data is surfacing. If fixed-price contracts are where the volume is, pricing discipline, resource planning and scope management become even more critical.
AI is reshaping the financial initiatives list — and that's a story worth telling.

The financial initiatives data includes something new this year: AI and technology adoption debuted as a response option and immediately tied for third, with 34% of firms naming it as a key financial initiative. That's a strong first-year showing, and it reflects the broader theme running through every section of this study — firms are increasingly treating technology as a direct lever for financial performance.
Here's what makes this interesting: several other initiatives declined in the same period. Streamlining billing processes dropped five percentage points. New financial system implementation also fell five points. These aren't coincidences.

When firms invest in AI and technology adoption as a financial initiative, they're often addressing the same underlying problems that "streamline billing processes" and "new financial system implementation" were trying to solve — just more comprehensively. Technology handles the heavy lifting; the initiative becomes less about the tool and more about the outcome.

For firms still running manual or semi-manual billing workflows, or managing financial data across disconnected systems, this is the moment to ask: are you building the foundation that lets technology deliver on its promise? Because the firms seeing real financial returns from technology investment are the ones who did the infrastructure work first — clean data, integrated systems, clearly defined workflows.
This is exactly where Full Sail Partners can help. Our custom development work addresses the gaps that off-the-shelf tools don't cover — the stored procedures, custom reports, and system-specific automations that make Deltek Vantagepoint work the way your firm actually works. If your billing process still requires manual intervention at key steps, or your financial reporting requires someone to manually pull and reconcile data, that's a solvable problem. We've helped dozens of A/E/C firms close those gaps.

We've also been building out educational resources specifically around accounting and financial operations in Vantagepoint. Our recent accounting webinars have covered topics like billing workflow optimization, invoice configuration, and month-end close — practical, scenario-based content designed for the people who actually run these processes. If you haven't attended one yet, keep an eye on our upcoming events.

What to do with all of this

The financial picture in this year's Clarity Study isn't a crisis — but it's a clear turning point. Firms that thrived in the growth environment of the past few years will need to operate differently to sustain performance in a more constrained one.

The most important thing is visibility. You can't protect margins you can't see, and you can't improve utilization you're not tracking in the right way. Firms that have real-time access to the metrics that matter — utilization by role, overhead trends, project profitability, billing velocity — are better positioned to respond early rather than react late.

The second is intentionality. This word comes up again and again in this year's data, and it's by design. Being selective about which projects to pursue. Pricing work that reflects your actual cost structure. Investing in PM capability as a financial discipline, not just a delivery one. Building processes that protect billable time rather than eroding it.

Full Sail Partners works with A/E/C firms at every stage — from Vantagepoint implementations to ongoing optimization to custom development that closes the gaps your ERP can't. If you want to talk through what the Clarity data means for your firm's financial strategy specifically, we'd love to have that conversation.

Catch up on the series so far: Technology Trends | Business Development

Next up: Project Management — we'll dig into how firms are managing delivery pressure, what the data says about accountability and performance, and where AI is starting to change how work gets done.

Every year, the Deltek Clarity A&E Industry Study gives architecture and engineering firms something concrete to work with: real data from real firms about what's working, what's stalling, and where the industry is heading. The 47th edition surveyed 896 firms of all sizes and types, and the throughline is clear. This isn't a market that rewards guessing or going through the motions. The firms pulling ahead are the ones making intentional, disciplined decisions at every level of the business.

Over the next few weeks, we're breaking down each section of the report. This week: Business Development.

More work, less reward

Here's the headline: firms submitted 32% more proposals in 2025 than they did the year before. That sounds like momentum. But the median capture rate fell 3.8 percentage points to 44.4% — the lowest it's been since 2019 and the sharpest single-year decline in the nine-year trend.

BD activity is rising, but converting pursuits to projects is becoming harder and more complex. The win rate data adds some nuance — the median slipped to 49% industrywide, but architecture firms were the outlier, actually gaining five points to 45%, likely reflecting tighter pursuit selection in a market where design-led work is more relationship-dependent. Almost nobody got easier wins this year.

Capture rate — the dollar value of proposals awarded relative to the dollar value submitted — makes the picture even clearer. Large firms dropped six points to 34%. Medium firms fell three points. The gap between the top quarter of firms (61.3%) and the bottom quarter (30.2%) is 31 percentage points — a spread that has less to do with market conditions and everything to do with how intentionally firms are choosing which work to chase.

High performers bucked the trend entirely, with their capture rate rising 10 percentage points to 59% while everyone else's fell. Same market, same headwinds, meaningfully better returns. The difference isn't luck or firm size or sector mix. It's the discipline to pursue less and win more.

Some of the decline reflects a market shift toward smaller-value projects — the total value of proposals submitted grew 12% while the number grew 32%, pointing to a lower average project value per pursuit. And a lot of it reflects what happens when more firms are chasing the same work in an increasingly crowded market.

The market itself is changing

It's not just that competition is stiffer — it's that the market opportunity itself is evolving.

Data centers debuted as a new category in this year's study and immediately claimed the top spot: 72% of firms expect to grow their position in that sector over the next 18 months. Energy and power held at 57%. These are sectors that barely registered a few years ago and are now driving significant optimism. Meanwhile, transportation dropped nine percentage points and hospitality continues its post-pandemic retreat. The firms best positioned for this environment aren't waiting for their traditional sectors to rebound — they're building credibility in new ones, which takes time, intentional relationship-building, and a clear-eyed view of where the firm can actually win.

Economic uncertainty compounds all of this. It debuted in this year's survey as a new BD challenge and immediately ranked as the top first-choice concern at 19%. The response isn't to slow down — it's to build a deeper pipeline and invest in positioning now rather than reacting when conditions shift.

Go/no-go decisions have never mattered more

Eighty percent of firms say they use a go/no-go process — but how they use it is shifting. Use for strategic opportunities only grew two percentage points to 32%, and use for all opportunities edged up to 38%. Among firms not yet using the process, 49% are now considering adoption, up from 29% the prior year. That's a meaningful signal.

A well-executed go/no-go process isn't a gate to slow things down. It's a filter that protects the firm's most valuable resource: pursuit capacity. As Daphne Bryant of ACEC put it in the report, it does more than filter opportunities — it aligns the firm's resources, expertise, and relationships with the pursuits that are truly winnable and worth winning.

The key word is data. Go/no-go decisions need to be driven by data-based questions — probability of winning, existing relationships, delivery capacity, fit for the work — not instinct or individual preferences. That's where a well-configured Deltek Vantagepoint environment earns its keep: relationship history, prior win/loss patterns, pipeline load, and delivery capacity all in one place. If your team is still making these decisions off a spreadsheet or a whiteboard, we should talk.

Pre-pursuit intelligence is a competitive edge — and AI is changing how firms build it

One of the most interesting data points in this section: lack of intel to position for a win dropped 15 percentage points — the steepest decline on the entire chart. Firms are getting smarter about the information available to them before they pursue, and AI-assisted tools are a big part of why — BD teams and principals are using them to surface opportunities earlier, qualify pursuits faster, find strategic partners and gather more context before committing resources.

But pre-positioning only works if the administrative burden is low enough to make room for it. That's where tools like Informer and Power BI, connected to Deltek Vantagepoint, pay off — surfacing win rates by sector, capture rate trends, and pursuit stage velocity in dashboards BD leaders can actually use day to day. We helped RTM Engineering Consultants build exactly this kind of visibility into their Vantagepoint environment — read how they did it. When your data is connected, your team spends less time hunting for answers and more time acting on them.

Formalizing the process (without making it rigid)

The share of firms with a formal BD process dipped three percentage points to 46% — worth examining but but not panicking over. As the seller/doer model expands and project managers take on more BD responsibility, a rigid step-by-step process often doesn't fit how the work gets done. The goal is practical frameworks — flexible enough to work across different markets and client types, consistent enough to create real pipeline visibility.

Vantagepoint has the infrastructure to support all of this — opportunity stages, pipeline reporting, relationship tracking, proposal history — but most firms are only using a fraction of it because the system wasn't configured with their specific workflow in mind. Full Sail Partners consultants work through exactly this with firms. Check out this demonstration on CRM in Vantagepoint to get the ideas flowing, then let's talk about building it around how your firm actually works.

The seller/doer model is thriving — and putting real pressure on project managers

The blended seller/doer model leads at 48%, and the seller/doer-only model holds second at 40%. Among high performers, seller/doer adoption rose nine percentage points to 55% — the clearest signal that top-performing firms are integrating BD responsibility into technical roles rather than siloing it. The reason is straightforward: clients want to talk to the people who will actually do the work.

But the model comes with real tension. Project managers edged down five percentage points to 14% "almost always responsible" for BD — a pullback that likely reflects what the industry already knows: the demands on PMs are often unrealistic. Cross-training for BD ranked third among top initiatives at 36%, up four points — a positive investment, but training alone doesn't solve a capacity problem.

The firms getting this right build structured time for BD into the PM role. And they invest in reducing friction in the tools. Project managers who can log a contact, update an opportunity stage, or check pipeline status inside the same system where they manage projects are far more likely to actually do it. If your PMs find BD tasks burdensome, that's often a workflow problem more than a motivation one. Our team can help.

The bottom line

The 2026 Clarity data on Business Development tells a consistent story: the environment rewards discipline, not volume. What separates high performers is a sharper, more intentional approach — to which pursuits they chase, how they position for them, and how they deploy the people responsible for bringing work in.

But discipline doesn't come from willpower alone. It comes from having the right data in front of the right people at the right time. That's what a well-configured Deltek Vantagepoint environment delivers — not just a system of record, but a foundation for smarter decisions across the entire BD lifecycle.

Full Sail Partners works with A/E/C firms at every stage — from first-time Vantagepoint implementations to established practices looking to get more out of a system they've had for years. We've seen the full picture, and we know where the gaps tend to show up. If you're ready to make your data work harder for your BD team, let's talk.

Next up in the series: Project Management. We'll dig into how firms are managing delivery pressure, what the data says about the most challenging phases of the project lifecycle, and where technology is creating the biggest opportunities.

Every year, Deltek's Clarity A&E Industry Study gives us something rare: a clear, data-driven look at how architecture and engineering firms are actually running their businesses — what's working, what's not, and where the industry is headed. The 47th Annual Clarity Study surveyed 896 firms of all sizes and types across North America. And this year, one theme runs through every section of the report: intentionality.

Firms aren't just spending — they're choosing. They're not just adopting — they're evaluating. The industry is moving away from reactive decision-making and toward strategic allocation. Quality over quantity. Fit over FOMO. That shift shows up clearly in the Technology Trends section, which is where we're starting this blog series.

The Problem with Shiny

Before we get into the data, here's the reality check that frames everything else.

When firms were asked to identify their top technology challenges over the next three years, three rose to the top:

• Prioritizing applicable technology trends (61% of firms)
• Lack of time to invest in learning (51%, up from 43%)
• Cost of technology (48%)

Read those together and a clear picture emerges: it's not that firms don't want to engage with new technology. It's that the landscape has gotten so crowded — and so loud — that figuring out what actually fits your firm has become its own full-time job. And nobody has time for that full-time job, because everyone is too busy doing their actual full-time jobs.

Think about where we are with AI right now. Every tool is positioned as the solution to every problem. Every vendor is promising transformation. It's the same conversation we had when social media exploded — do we need to be on TikTok? Some firms jumped in anyway. Others asked, "what problem does this solve for us?" and moved on. The firms asking that second question are the ones getting real value from their technology investments today.

That's the discipline the 2026 Clarity Study is pointing to. There's no room to chase something that clearly isn't a fit. The cost — in time, budget, and organizational focus — is too high.

Intention Is the Strategy

The data backs this up directly. 67% of firms say creating a strategic plan for implementing technology is their top initiative. Not adopting more tools. Not keeping up with trends. Planning. That's a meaningful signal about where A&E firms are in their technology maturity.

And it makes sense, because every level of a firm is touched by technology rollouts — from principals making the investment decision to project managers using new platforms to admin staff handling training. Day-to-day responsibilities crowd out the time needed to learn something new, which is why that "lack of time to invest in learning" challenge jumped eight percentage points in a single year. The firms that carve out dedicated learning time tied to specific tools and business objectives are the ones converting adoption into results.

Why Digital Maturity Matters

One concept weaves through the entire Technology Trends section and connects every data point: digital maturity. It's not just a buzzword. It's the measure of how well a firm's business strategy and IT management actually work together — and it's the thing that determines whether AI adoption pays off.

Currently, 33% of firms classify themselves as mature or advanced — nearly double the share from four years ago. The largest group (42%) sits in the "applied" stage, where business and IT goals are aligned but digital initiatives haven't yet reached their full potential. That's actually a strong place to be: you have the alignment. The work is using it to drive measurable business impact.

The urgency is real. 42% of firms believe they risk losing market share without meaningful digital progress within the next two years — up nine percentage points year over year. That number rises every year because the firms that do build their digital foundation keep pulling further ahead.

AI in Practice

It's impossible to talk about technology in A&E right now without talking about AI. Usage jumped from 53% to 70% in a single year — that's a 17-percentage-point climb. Generative AI use climbed to 78%, with growth across every use case.

But here's the more interesting story: where firms are applying AI is shifting.

The leading use of AI is now business process automation — 34% of firms, up 10 percentage points from last year. Think autonomous, task-oriented applications. The second leading use is providing insight into operational performance at 28% (up 17 percentage points). Firms are moving past the novelty of generative AI and into applications that directly affect how the business runs. For those of us who work closely with Deltek tools, this aligns with what we're seeing in practice — the firms getting the most out of platforms like Deltek Vantagepoint are the ones using integrated data to drive decisions, not just generate content.

The report makes an important point about AI benefits: the ones lower on the list require firms to more fully embrace the AI capabilities already available to them across project and financial systems. And sitting beneath all of it is a prerequisite that can't be skipped — clean data and integrated systems. AI is only as good as the data it runs on. Firms that have invested in data hygiene and system integration are seeing real returns. Firms that haven't are still chasing them.

What's Driving the Field

When it comes to technology specifically tied to project delivery, Building Information Modeling (BIM) remains the clear leader. 45% of respondents say BIM is very important to their firm's project delivery — up slightly from 43% last year. That's not going anywhere anytime soon. BIM is embedded in core workflows; it's not a trend anymore, it's infrastructure.

What's moving is everything around it. Sustainability (23%) and data analytics (20%) both dipped year over year — not because they became less relevant, but because AI is gaining ground. AI agents and AI-based automation nearly doubled in perceived importance, from 6% to 11% of firms rating it very important. When combined "very" and "somewhat" important ratings are included, that share jumped 12 percentage points to 48%.

Also worth noting: computer vision made its debut in this year's survey. Computer vision is AI that can interpret and analyze visual information — photos, video, scans — the way a human eye would, but faster and at scale. In A&E, that looks like automatically extracting specs from drawings and RFP documents, detecting safety hazards from drone footage on job sites, or comparing as-built conditions against design drawings to flag clashes before they become field problems. It premiered at 10% — a number worth watching.

It's Not If — It's When

We won't spend much space here, but this number is worth sitting with: only 3% of firms reported no attempted cyber attacks over the past three years.

Cybersecurity isn't a line item to revisit during budget season. It's a baseline operational requirement — and it's directly connected to the same digital foundation that makes everything else in this section work. If your AI adoption strategy doesn't include a cybersecurity layer, it's not a complete strategy.

Still Stuck on Manual?

Here's a truth that doesn't get enough attention: 80% of firms still report complete to moderate reliance on manual processes in administrative and management functions. In accounting and finance specifically, that number is 75%.

The report puts it plainly: reducing manual data entry is not simply an efficiency initiative. It's one of the most concrete steps a firm can take toward digital maturity.

Those manual processes aren't just slow — they're blocking progress. Clean, connected data is the foundation of every AI benefit we talked about above. Firms addressing manual processes now aren't just solving a near-term operational problem. They're laying the groundwork for meaningful AI returns down the road.

Cloud Is No Longer Optional

We'll close with the data point that, in our view, deserves the most attention — especially for firms still running on-premise systems.

The 2026 Clarity Study makes this clear: cloud infrastructure has moved from competitive differentiator to baseline requirement. Here's what the numbers look like:

• More than half of firms (58%) now report that at least 60% of their infrastructure leverages cloud or SaaS — up from 52% last year
• 42% of firms report that 80% or more of their systems are cloud-based — up from 37% last year
• Only 14% of firms remain in the earliest stages of cloud adoption (fewer than 20% of systems in the cloud), down from 20% last year

That last number is the telling one. Even the most cautious firms are making the move. And why? Because the cloud isn't just about where your data lives. It's about what becomes possible when your systems are connected, scalable, and AI-ready. The integration, security, and scalability that modern tools depend on are built into cloud infrastructure. If you don't have that foundation, you're working twice as hard to get half the results.

At Full Sail Partners, we've been having this conversation with our on-premise clients proactively. The data from this report reinforces what we've been seeing firsthand: the transition is coming for every firm. The question isn't whether to move — it's whether you get ahead of it strategically or wait until you're forced to scramble.

If your firm is ready to begin — or reengage in — the cloud conversion conversation, our team is here to help. Whether you're simply exploring timelines and considerations or actively planning your move, we can help you evaluate the right path forward. Reach out directly to your account manager or complete our contact form to start the conversation

The Bottom Line

The 2026 Deltek Clarity A&E Technology Trends section isn't telling firms to slow down on technology. It's telling them to aim better. The firms pulling ahead aren't adopting the most tools — they're using the right ones, built on a strong digital foundation, with a plan behind every decision.

Intentionality isn't a soft concept. It's a competitive advantage.

We'll be covering each section of the Clarity Study in this blog series — stay tuned as we dig into Business Development, Project Management, Human Capital Management, and Financial Management in the weeks ahead.

Want to talk through what the Clarity data means for your firm specifically? Contact us — we'd love to dig into it with you.

Welcome to the final installment of our comprehensive series recap of the 44th Annual Deltek Clarity Architecture and Engineering (A&E) Study. Today, we embark on an in-depth exploration of the financial management trends found in the newest Deltek Clarity A&E Industry Report which focused on 2022 fiscal data. This report offers a rich tapestry of insights, shedding light on the critical financial dynamics that are currently influencing the industry.   

A Year of Remarkable Financial Success

In 2022, A&E firms achieved remarkable financial success, building on the bullish goals they set for themselves in 2021. One of the standout trends in the industry was the ability of firms to leverage direct labor costs and subconsultants effectively to drive increased revenues in 2022, leading to substantial improvements in operating profit (EBIT). Notably, revenue growth outpaced growth in headcount and wages, and firms achieved gains across various financial metrics.

This indicates the ability of A&E firms to make strategic investments during favorable economic conditions. On average, firms’ financial performance outshone expectations. To sustain this momentum, firms must continue to focus on key financial management trends and top financial initiatives.

Addressing Top Financial Challenges

As we look into the financial landscape of 2023, it's important to note that the most prominent challenges faced by A&E firms remain consistent with those of previous years.

• Finding and Retaining Qualified Staff: This is the most prominent financial challenge identified by firms in 2022 and it remains the top concern, with 65% of A&E firms identifying it as one of their top three challenges.
• Increasing Profitability: 45% of respondents indicated that increasing profitability was one of their top challenges. To handle this, A&E firms continue to refine their strategies and use technology and process improvements to reduce project delivery costs, particularly for time-intensive and manual tasks.
• Managing Growth: Tied with increasing profitability, growth management is a concern for 45% of companies in the A&E sector. Firms must address the challenge of managing growth effectively by balancing robust pipelines of new projects with existing resources to ensure profitable project delivery despite rising costs.

Financial Improvement Initiatives

Once again, this year’s financial improvement initiatives are very similar to the previous year. Below are some of the critical initiatives that A&E firms have highlighted as requiring attention throughout the current year and into the next:

• Business Process Improvements: The most significant initiative of the year, as indicated by over half of the firms surveyed (55%), is prioritizing business process improvements in their financial strategies.
• Training Project Managers on Financials: Ensuring that project managers have a strong understanding of financial management principles is essential for optimizing project delivery. This initiative was the leader in last year's results, but it has dropped to a close second this year with 52% of A&E firms citing a need for improvement.
• Increase Talent Spending: Investing in hiring and retaining top talent is critical to achieving sustainable growth. By attracting and retaining the industry's brightest minds, A&E firms not only ensure their competitive edge but also foster a culture of innovation and excellence that permeates every project they undertake.
• Better Managing Growth: A&E firms recognize the need to drive efficiency and effectiveness in pipeline management, talent development, project execution, and cash flow management. Streamlining these critical aspects of their operations allows them to not only meet client demands but also adapt swiftly to industry changes, ensuring long-term viability in an ever-evolving market.
• Business Process Improvements: By identifying and implementing process improvements, sucA&E firms can reduce time-consuming manual tasks, minimize errors, and enhance productivity, ultimately freeing up resources to focus on strategic initiatives that drive growth and innovation.

The Path Forward for Financial Management

This section of the 44th Deltek Clarity A&E Industry study delved deep into the financial management trends within the A&E industry, offering a comprehensive view of the financial dynamics shaping this sector. This year we witnessed remarkable financial success, with firms strategically leveraging their resources to achieve impressive revenue growth, outpacing the expansion of their workforce and wage costs. As they continue to navigate the ever-changing economic landscape, these A&E firms must remain vigilant in their approach to financial management.

To gain a more comprehensive understanding of this year's financial trends and their implications for the architecture and engineering sector, we encourage you to explore the complete 44th Annual Deltek Clarity A&E Report. It provides an in-depth analysis and a wealth of insights, serving as an invaluable resource for professionals and organizations in this ever-evolving industry.

As part of our ongoing commitment to exploring the latest industry insights, Full Sail Partners has been diligently examining the data from the Deltek Clarity Report, and this blog represents another installment in our series dedicated to this topic. The 44th Annual Deltek A&E Clarity Study is a beacon, illuminating the crucial technology trends that are reshaping the Architecture and Engineering (A&E) sector. Firms are strategically leveraging technology to achieve digital maturity, enhance cybersecurity, and refine business processes. In this blog, we'll dissect key findings from the study's Technology Trends section to provide valuable insights for industry professionals.  

Addressing Top Technology Challenges

To overcome the paramount challenges presented by technology, firms must extend their focus beyond merely recognizing emerging trends. An essential component of success involves equipping their staff with the requisite knowledge and skills to harness these technologies effectively. Establishing a culture of comprehensive education throughout the operational staff is pivotal for the deployment of these solutions. Furthermore, firms can greatly enhance their technology adoption by fostering collaboration with external experts. These experts bring a wealth of experience and specialized knowledge, which can be instrumental in seamlessly and cost-effectively integrating technology solutions into the firm's existing workflows.

Strategic Technology Plans and Digital Maturity

Firms are prioritizing strategic technology plans to navigate challenges related to rising costs and talent management. They're investing in high-impact areas such as project management and financial management. However, an uptick in manual data entry indicates a potential gap between strategic goals and implementation. Despite this, firms are advancing digitally, bringing more operations in-house and empowering staff as technology champions.

Firms are increasingly confident about achieving digital maturity, with 32% now self-classifying as advanced or mature, up from 18% in 2021. Looking ahead, 82% envision advanced or mature stages in five years. However, realizing this vision requires a solid plan and actionable tactics to turn optimism into reality. For more information, take a look at the Digital Transformation Maturity Spectrum in the Deltek Clarity Architecture and Engineering Industry Study, linked at the bottom of this blog.

Managing Technology Costs

Rising technology costs are a significant concern for firms, underscoring the need for strategic evaluation of existing technology to align with overarching objectives. Prioritizing solutions that offer both immediate and long-term ROI is essential for cost-effective technology adoption. Internal champions play a pivotal role by facilitating seamless integration and inspiring colleagues, contributing to heightened employee engagement and retention rates. Cultivating a culture of technology champions ensures that firms maximize their technology investments while enhancing overall workforce effectiveness.

Overcoming Technology Adoption Hurdles

The adoption of emerging technologies presents several challenges, including concerns regarding their relevance, the absence of internal expertise, and potential knowledge gaps among employees. To effectively address these hurdles, firms are encouraged to proactively invest in upskilling their existing staff. This investment not only equips employees with the necessary skills but also fosters a culture of continuous learning and adaptability, crucial in today's dynamic technological landscape. Additionally, leveraging tech-savvy champions within the organization can be transformative. These champions serve as enthusiastic advocates for technology initiatives, bridging the gap between vision and implementation.

Data and Cybersecurity Concerns

Data and cybersecurity are paramount in the A&E industry, with 68% of firms citing it as a top IT operations challenge. Cybersecurity threats impact businesses, making robust security policies and procedures crucial. Ensuring the protection of sensitive information and maintaining clients' trust are central to the industry's continued success.

Redefining Digital Transformation

A&E firms are continually evolving their use of technology to gain a competitive edge. While digital maturity is on the rise in companies of all sizes, technology costs can be a significant barrier. Firms are encouraged to focus on upskilling staff and leveraging existing technology capabilities, as this strategic approach can not only drive operational excellence but also empower firms to navigate the challenges posed by the fast-paced technology landscape effectively. By investing in their workforce and maximizing the potential of their current technology solutions, companies can position themselves as industry leaders ready to embrace the future of technology.

Manual Data Entry: A Persistent Challenge

Even with advanced technological solutions at our disposal, many organizations still find themselves heavily dependent on labor-intensive manual data entry. This dependence spans across various departments, including administrative, accounting, finance, and operations, where human intervention remains a necessity. To optimize their operations and enhance efficiency, these businesses must pinpoint existing inefficiencies and begin to automate their workflows.

A closer look at the statistics reveals the extent of this reliance on manual data entry across key organizational departments:

• A significant 72% of accounting and finance departments within firms rely anywhere from completely to moderately on manual data entry.
• Similarly, a substantial 74% of Operations/Resource Management departments within these organizations are found to be anywhere from completely to moderately reliant on manual data entry.
• Furthermore, a staggering 81% of Administrative/Management divisions within firms also exhibit a significant reliance on manual data entry.

These figures underscore the pressing need for organizations to embrace automation and technological advancements to alleviate the burdens of manual data entry and unlock the full potential of their workforce.

Embrace the Future of Technology

To flourish in this technology-driven era, firms must go beyond acknowledging emerging trends; they must empower their staff with the skills and knowledge needed to harness these technologies effectively. Cultivating a culture of comprehensive education across operational staff is pivotal for the successful deployment of these solutions, and collaboration with external experts can significantly amplify technology adoption.

As A&E firms strive for digital maturity and navigate the challenges of rising technology costs, they must continue investing in their workforce and maximizing the potential of their current technology solutions. This strategic approach not only drives operational excellence but also positions companies as industry leaders prepared to embrace the future of technology. Despite the persistence of manual data entry challenges, the industry's resilience and commitment to transformation ensure that the path forward remains illuminated by the beacon of technological progress.

For more details on Technology Trends from the 44th Clarity Study, read the entire report. 

How does your firm measure up? That is the vital question many architectural and engineering (AE) firms should be asking themselves. It is challenging to manage what you are unable to measure! There are several key performance metrics that an AE firm should use to determine its current status. These measurements are important to not only keep you abreast of the condition of your company, but they also allow you to examine the past, so you can plan for the future. Let’s look at a few of the significant performance metrics. 

Proposal Win Rate

When we talk about Proposal Win Rate, we're essentially looking at how effective your business development efforts are at turning potential leads into actual projects. It's like keeping score on how well you're playing the business game! By tracking this rate, you gain valuable insights into what strategies are paying off and which ones might need a little tweaking. 

Even the tiniest improvement in your win rate can have a huge impact on your bottom line. Think about it – landing just a few more projects out of every ten proposals can make a significant difference in your profitability.  

In the fiercely competitive world of AE firms, the ability to gain new business is like having a superpower. It's what sets successful firms apart from the rest. So, honing your business development skills and consistently improving your win rate is critical to your success. 

Here's a pro tip: When analyzing your Proposal Win Rate, pay attention to the reasons behind both your wins and losses. Learning from both successes and setbacks is the secret sauce to continuous improvement. You might discover patterns that can help you replicate your victories or identify areas that need some extra attention. 

Profit

Profit is a crucial metric for any AE firm’s success. It tells you how well your firm is doing financially. It's the money left over after deducting all expenses from your gross income. Profitability metrics help AE firms figure out which projects are worth pursuing. It shows you if you're making enough money to keep your operations going and growing. 

Analyzing your profit helps you make smart decisions about where to focus your efforts and resources. It's like a report card for your financial performance. Being profitable is essential for your firm's sustainability and growth. It allows you to invest in your business and attract top talent. 

But don't get too fixated on profit alone. Keep in mind that different projects may have different profit margins and timelines. 

By keeping a close eye on your profit over time and comparing it to your goals, you can spot areas for improvement and make informed decisions for a prosperous future. 

Labor Utilization

Labor utilization is a metric that helps you measure your team's efficiency. It ensures you have the right number of employees for optimal performance. By analyzing labor utilization, you can identify both high and low performers, enabling you to take targeted actions for improvement. 

To maintain an effective labor utilization rate, review both billable (direct) and non-billable (indirect) hours. Monitoring this metric allows you to make data-driven decisions and allocate resources wisely for maximum productivity. 

A well-utilized team leads to a happy and productive work environment, driving your firm's success. Keep an eye on labor utilization for a thriving team and business! 

Net Revenue/Operating Income

Net revenue and operating income are like a dynamic duo that keeps your business running smoothly and efficiently. Let's take a closer look at these essential metrics and understand why they're crucial for your AE firm's financial success. 

First up, net revenue is the lifeblood of your business. It's the total revenue your firm generates after deducting any discounts, returns, or allowances. Think of it as the fuel that keeps your business engine roaring. Without sufficient net revenue, your firm's growth and sustainability could hit a roadblock. 

Operating income, on the other hand, measures your business's capacity to take on new projects while covering all operating expenses. It's like a litmus test of your firm's operational efficiency. By subtracting your operating expenses from your net revenue, you get a clear picture of how much profit you're generating from your core operations. 

Now, here comes the interesting part: net revenue also sheds light on your firm's relationship with subcontractors. It shows how much of your revenue goes to paying them for their services, leaving you with the revenue that your firm retains for its own services. Understanding this breakdown helps you gauge the impact of subcontracting on your profitability. 

By carefully tracking net revenue and operating income, you can make informed decisions about pricing, resource allocation, and investment opportunities. It's like having a compass that points you in the direction of profitability and growth. 

For example, if you notice that your net revenue is high, but your operating income is lagging, it could signal inefficiencies in your operations or excessive costs that need addressing. On the other hand, if your operating income is strong, but net revenue is low, it might be time to revisit your pricing strategies or explore new revenue streams. 

In a nutshell, net revenue and operating income are two sides of the same coin. Together, they provide valuable insights into your business's financial health, helping you steer it toward prosperity. 

So, pay close attention to this financial power duo. Regularly monitor their performance, set targets, and use the insights gained to fine-tune your business strategies. With net revenue and operating income on your side, you'll be well-equipped to navigate the waters of profitability and keep your AE firm thriving! 

Backlog

The backlog metric is your firm's project navigator, keeping you on course within your budget. By tracking both ongoing projects and potential wins, it provides a clear picture of your workload and budget needs. This insight helps you plan ahead, allocate resources effectively, and deliver top-notch results to your clients. Regularly keeping an eye on your backlog ensures you stay on track and sail smoothly toward success! 

Client Loyalty

For any AE firm to grow and continue to be successful, client loyalty is a necessity. It is important for both word-of-mouth referrals and repeat business. Meeting client expectations, proactively engaging in client feedback, and acting on areas that need improvement are all essential to keeping loyalty. 

Cost of New Business

When it comes to growing your AE firm, new business opportunities can lead the way. But expanding also means there are costs involved. Measuring these costs helps you choose which opportunities are worth pursuing and if the potential gains are worth the investment. Remember, calculated risks can lead to profitable growth. So, keep an eye on the cost of new business and set your company on a path of strategic expansion! 

Measuring Up the Firm

Keeping a close eye on key performance metrics is the secret sauce to your AE firm's ongoing success. We've explored some noteworthy metrics today, but there's a whole world of data waiting to be discovered. It's up to you to decide which metrics align best with your firm's goals. 

To see how your firm measures up with these KPIs and gain valuable insights into the A&E industry, we encourage you to download the latest Annual Deltek Clarity A&E Industry Study by clicking the image below. This study contains valuable information to aid your decision-making and stay ahead of the competition. 

Remember, the path to prosperity starts with data-driven decision-making. Equip your firm with the right metrics, ensure your team understands the goals, and set sail toward a brighter, more successful future! 🚀 

According to this year’s Deltek Clarity Architecture & Engineering (A&E) Industry Study, it is looking to be a landmark year for the architecture and engineering industry with net revenue growth forecasted to grow to 17.6%. A&E is doing quite well despite the pandemic with the highest net revenue growth in the last ten years at 11.4%. This increase is assisted by A&E’s market position, which is expected to either grow or remain steady in markets across the board. Most notably water/waste/stormwater, transportation, and industries that fall under the “other” category (such as life sciences and senior living) are predicted to see great increases. As a result, firms will not only need to strategically pursue the right projects but will also need to grow and develop a staff to deliver on these projects.

Top Business Development (BD) Challenges 

The ever-changing nature of the business world is continuing to keep firms on their toes with new challenges. Unlike the previous year, a majority of firms (78%) have identified that finding and retaining qualified staff has been a struggle for them. This is coupled with other mass-reported problems such as staffing shortages and difficulty retaining employees. Staffing challenges have a direct impact on business development, not only lacking adequate staff to conduct business development activities but also not being able to provide the most qualified teams to win and deliver on projects. 

Time to nurture client relationships is the top business development challenge for A&E firms according to the report. With favorable market conditions, new opportunities will be plentiful which poses a challenge for firms to keep up with their clients. Time is money and time is also in short supply. With the reporting firms revealing an average work backlog of nearly 9 months, it is clear that companies must find a way to increase productivity. Upskilling business development talent and streamlining the BD process will help to free up time to strategically nurture client relationships. 

Other top BD challenges from the study include increased competition and identifying prospects. Firms must differentiate and hone branding across thought leadership and social marketing channels to distinguish themselves in the marketplace. Additionally, with a positive industry outlook this year, firms will need to be more strategic in pursuits that work best for their company’s strengths. 

Increased Formal Business Development Process 

Of the companies surveyed, 45% have a formal business development process, which is an increase going up from 39% the previous year. Though this means that 55% of firms surveyed still do not have any formal business development process. In these cases, responsibility for business development tasks is most often pushed to the executive team, project managers, and marketing staff. While dedicated business development staff may not be necessary in every case, it is important not to overlook the kind of work they do. Most notably, they tend to client relationship development, proposal development and networking, but they have plenty of other duties as well. Their jobs help to create new business opportunities, and within the last year active client relationships, requests for proposals and networking placed in the top five sources of new opportunities in the surveyed firms. 

A Positive Year for Proposals Requires Evaluation 

As suggested by the Deltek Clarity study, operating in a market with limited resources but high demand, the go/no go process is significant to evaluate the projects firms will pursue. While the number of firms employing the go/no go process has increased in the last year, there is still a large population who do not utilize it in the slightest. Of the companies who reported, 22% don’t use any kind of go/no go process. Listed below are the top three questions that businesses ask when deciding whether or not to accept a proposal: 

• Is it a good fit for the type of work we do? 
• Do we have an existing relationship with the client? 
• Do we have the staff to deliver the project?   

This method of weeding out less profitable projects is more useful than ever, as a significant rise in the number of proposals submitted and the number awarded in firms of all sizes was observed. In-kind, the average win rate of proposals has increased in the last year to 49.2%, the highest it’s been since the beginning of the COVID-19 pandemic. The average capture rate is also up from the previous year, now standing at 48.5%. 

Marketing Techniques Present and Future 

A majority of businesses reported using social media posts for marketing, with only 16% not indicating any use. This was followed by client-specific marketing at 67%, trade shows/exhibits at 56%, email marketing at 54% and thought leadership at 42%. The order of these marketing methods is projected to change, however, with the study offering up that client-specific marketing could overtake social media marketing within the next five years. Thought leadership is predicted to advance to third place among important marketing techniques, with trade shows/exhibits and email marketing falling more and more by the wayside. 

Business Development Initiatives 

Based on this year’s study, some of the priority business development (BD) initiatives for A&E firms are hiring additional staff, earlier identification of opportunities and requirements and expanding geographically. Since BD has not been spared from staffing challenges, and firms are seeing more proposals, projects, and nurturing opportunities, the focus on obtaining the best-qualified staff is of tantamount importance. Another area that has grown in importance is the geographic expansion of firms requiring yet again additional staff. One more initiative to identify opportunities and their requirements remains top of the list as well. Teams shouldn’t be wasting time and their resources on projects that are not winnable. 

Final BD Outlook from Deltek Clarity 

The 43rd Deltek A&E Clarity study found that while the world still is not clear about the pandemic, things are looking up for the industry. The top problems of participating firms are not dire, and by focusing on the employee base and current client relationships, these issues can be fixed. This year’s Deltek Clarity report also noted that freeing up time is necessary to clear the obstacles in the way of each business regarding BD. To remedy this, employing the go/no go process and better utilizing the tools provided by Deltek to streamline the BD process is suggested. 

How does your company stack up to those that participated in the survey? For a more in-depth look at the data behind the 43rd Deltek A&E Clarity study, use the link below to receive the report for free right now! 

Finding, recruiting and retaining top talent affects nearly every part of architecture and engineering (A&E) firms, as evident in the 43rd Deltek Clarity Study. In a previous blog article, we dove into the specific human capital management (HCM) challenges. Today’s focus will be on sharing tips that A&E firms can use to address those challenges.  

Acquisition & Retention Connection 

The number one initiative that respondents to the survey were considering taking was improving the opinion of their organization in the marketplace to attract better talent. Firms should be thinking about their brand as a sum total of all of their processes, actions and culture. It’s not just a mission statement on a website. It’s critical to start with the firm’s brand and ensure it’s authentic.  

How well does the firm’s brand display authenticity and empathy, as well as showcase modernization with firm processes and utilizing technology? Also, it’s not enough to just focus on the brand. Firms have to additionally communicate the brand outwardly, and not just by the firm’s employees, but by clients and customers who know other people in the marketplace.  

Another tip is to review the firm’s hiring process. Ensure everybody in the hiring process understands the experience the firm’s trying to create and follows through on. Candidates will drop out of the process and/or won’t accept positions because they weren’t treated well throughout the process. The firm should create an experience specific to the acquisition process. Everyone involved in the firm’s hiring process should understand the critical role that getting the offer accepted depends upon creating a great experience and following through on commitments. Every touchpoint with the candidate is a way to demonstrate the firm’s culture. 

Onboarding talent effectively is another tip to address HCM challenges. According to the Clarity study, it’s taking around four months from when the job is posted to the new hire producing billable work. So, the better the firm is at its onboarding program not only will that new hire be quicker to bill work, but it’s also a key time to keep that person’s retention and engagement high. New hires are already excited about coming onboard, and if there’s a lag in their training and they don’t feel like they’re having an impact on the business, their engagement level can drop quickly.  

Acquisition and retention are connected. If the firm can create a good retention strategy, especially through branding, it will have less need for acquisition and thus fewer acquisition costs. This frees up more budgets to continue with retention and engagement programs which in turn helps increase retention.  

Culture & Communication 

One of the most important things to the modern workforce is relationships, specifically, relationship-focused employment experiences. So how do A&E firms get to that? Here are a few strategies: 

• Continuous Feedback Discussions – The relationship between employee and manager is pivotal.  Annual performance reviews can be expensive and not many people get a lot out of them. Firms should maybe at least supplement their annual review process with continuous feedback discussions. These are times when people can connect frequently and start to feel value.  
• Pulse Surveys – Pulse surveys are a way to demonstrate an interest in employees’ perspectives. 
• Authenticity & Empathy – The modern workforce craves this, and this can be demonstrated through continuous feedback discussions and frequent interactions between employees, project teams, project managers and direct supervisors. People want to work for somebody they connect with, somebody they align with, and it’s never been more important. From a modernized performance management perspective, firms should implement processes that allow for frequent connection and allow opportunities to display authenticity and convey empathy. 
• News & Information – Employees desire company news and information and want to know how the firm is doing. They also want to know where they stand. In the absence of information, people create their own, and when they don’t know how the firm is doing, they start to think that maybe things aren’t going well. How can the firm create a great culture and engagement by just making sure it’s transparent as possible? Furthermore, how can the firm make sure that information is shared frequently and consistently? 

Modern Performance Management Tools 

Three modern performance management tools include continuous feedback, continuous goal management and recognition. Below is a summary of each. 

• Continuous Feedback – Good continuous feedback discussions are not just “check-ins” but are opportunities to drive goal discussions, career development discussions, and improve engagement and retention. They can also serve as an opportunity to recognize people in a one-on-one setting. They are very highly desired by the modern workforce and can replace or supplement the appraisal process.  
• Continuous Goal Management – This approach removes the time box traditionally associated with annual goals which is not how people work. Instead, this approach focuses purely on the alignment of the employee and the firm, driving them both mutually forward.  
• Recognition – This is key to engagement, retention and boosting productivity, morale and happiness. When employees are recognized for good work, it releases dopamine in their brains and creates feelings of pride and pleasure. This then tells the brain that if they do more things like this, they’ll get more praise and recognition and feel this way again. As a result, the behavior starts to change, but be careful not to just recognize people haphazardly and constantly to a point where it’s meaningless. So, think about what a formal recognition program can do for not only the firm but from a brain chemistry standpoint.  

Learning & Development 

The two top initiatives for managing talent from the study were "create/improve success and career development planning" and "create/improve employee engagement programs." Here are some tips to take action on learning and development. 

• Organizational Focus – Learning and development has to be a firmwide focus with buy-in from executive leadership. Managers need to promote learning, and time has to be devoted to it.  
• Career Mobility – Firm leaders have to allow for career mobility. Retaining a great employee, at least in some aspect of the firm, is better than losing them totally.  
• Development Plans – There should be plans for all levels supporting onboarding, employee growth and gap fills. 
• Project Focused – There should be project-focused learning and development. Many survey respondents said that PM training is key. Firms should invest in that project management training. 

• Upskill & Reskill – This strategy supports career mobility, improves employee engagement and retention and improves productivity. Watch this webinar to learn more about how to deploy upskilling and reskilling at your firm. 

Dig Deeper into the 43rd Annual Deltek Clarity Report 

Hopefully, A&E firms will consider all of these useful tips to address their HCM challenges. To get more details on A&E firm HCM trends or other interesting findings, download the full Deltek A&E Clarity report. Click the image below to grab a free copy of the report along with a scorecard to chart the firm’s results. 

It’s no surprise that finding and retaining top talent is a challenge facing every architecture and engineering (A&E) firm in North America but what specific human capital management (HCM) challenges are there? How do firms compare to the industry and what do the numbers really tell them? This overview is the first piece in a two-part series that will dig into the HCM specific challenges revealed from the 43rd Annual Deltek Clarity Study.  

Every Department Impacted by Staffing Shortages

Almost every area of the Deltek Clarity Study cited human capital management (HCM) towards the top, if not the number one challenge to growth. Many industries, including A&E, have been affected by the great resignation. Specifically, firms are saying it’s hard for them to win more business because they’re not necessarily certain that they can go ahead and staff projects. Hiring additional staff has become of paramount concern for A&E firms right now.  

The top financial challenges indicated from the Clarity study are finding and retaining qualified staff. This isn’t about a certain number of staff, but really finding qualified people that can handle the type of work and the different projects the firms have. This need is leading to more career development and training initiatives by A&E firms.  

Similar top challenges are cited in the project management area, including staff shortages and inexperienced project managers. So, how do firms develop project managers? How do they get the project managers up and running so they manage projects effectively? Part of the solution is hiring more experienced project managers, but other top initiatives include developing internal project manager best practices and investing in internal project manager training. 

Top Challenges for Human Resources 

The study asked what the top three challenges were for managing human resources. The number one response was retaining employees followed very closely by employee engagement/experience. Firms are realizing that they need to really become proactive in their retention and engagement efforts.  

No longer are firms just competing with companies in their own geographic region. With the rise of remote work, A&E firms are competing with other firms located across the country and talent is being recruited away from other areas. Other top challenges included career development, planning and performance management.  

Top Talent Acquisition Challenge 

The Deltek Clarity Study asked about the top acquisition challenges A&E firms are facing. The top response was the availability of good candidates in the marketplace. Based on this, it might be a good time for firms to step back to look at how they can change their practices or modernize their efforts to support recruiting.  

Specifically, this requires identifying what a good candidate means to the firm. The firm should ask what makes somebody who handles a role in the firm successful at it? Does the firm basically just review previous job descriptions or job profiles and reuse those? Has the firm really looked at what makes people successful in their specific role and in the firm as a whole from a culture perspective? 

After doing this initial analysis, the firm should evaluate what it is doing to diversify. Diversifying the talent pools makes sure that the firm is putting itself in the best position to find candidates that meet the profile developed. Also, the firm should consider what roles can be handled remotely. 

Firms should think about this from both angles – first doing a good job of understanding what makes people successful at the firm and then diversifying the talent pools to widen the marketplace. 

A&E Industry HR Statistics  

To give some idea of how a firm fits within the North American A&E industry, here are some high-level statistics related to human resources from the 43rd Deltek A&E Study: 

• Employee turnover has increased a little from the previous year and is at 13.6%. 
• Staff growth overall is up to 3.2% which means that despite a higher turnover rate, firms are still growing.  
• However, offers accepted decreased and is sitting at 77.4%.  

• Only about 50% of firms in the survey had more open positions last year, while this year’s survey saw 65% of firms with more open positions.  
• The time to fill positions is becoming longer and longer, with 50% of firms saying it’s taking 60+ days to fill open positions.  

Gen Y Has Taken Over 

The Deltek Clarity Study looked at both generational composition firm wide and by management level. Firm wide, the Millennials (Gen Y) have taken over the greatest portion of staff making up 39%. It’s important to note that Gen Z is coming right up behind which really starts to play into how firms develop their culture and organization.  

The top-level leadership roles in organizations are currently held by Gen X, nearly 70%, but the study reveals that in the first to lower-level management, the younger generations are beginning to take over a lot of those positions. This is great because firms are starting to see new thoughts, new processes, modernization, and a lot of variety and diversity. A&E firms will continue to see this trend in terms of those generational shifts to the younger generation from a management perspective which will affect recruiting, retention, and talent development.  

Top Tools Used to Develop Talent 

Firms cited coaching and mentoring, external education programs, and leadership development programs as their top three tools used to develop talent. The very top method is coaching and mentoring. Firms should ensure that coaches and mentors are available to make the best impression on employees. Firms should not just rely on who has been at the firm the longest for choosing their mentors and should make sure that these mentors are equipped with the right skills to bring other staff along.  

Engaging Employees Too Late 

The Clarity study showed that 86% of firms conduct exit interviews, but these interviews are often too late. Many times, these type of exit interviews are not as effective for getting honest responses from the employees because they are simply trying to get through the exit process and leave the firm. Unfortunately, many firms are spending a lot of time on this strategy rather than on other strategies such as stay interviews or pulse surveys.  

Only 30% of firms conduct pulse surveys. Pulse surveys are quick hit surveys where the firm can get answers. They can be sent to the recent hires on their onboarding experience, for example. The idea is to gauge the pulse in real time throughout the course of the year.  

Dig Deeper into the 43rd Annual Deltek Clarity Report 

To get more details on A&E firm HCM trends or other interesting findings, download the full Deltek A&E Clarity report. Click the image below to grab a free copy of the report along with a scorecard to chart the firm’s results. Don’t forget to stay tuned for the second installment in this series that will share some ways firms can use this information to improve processes and help meet some of these HCM challenges. 

While A&E firms are struggling with staffing challenges, business process automation, and managing a strong backlog pipeline, the discipline of project management and project delivery performance has improved. According to the 43rd Annual Deltek Clarity A&E Study, more firms are increasing internal project financial reviews and installing a project management center of excellence.  

How does your firm compare to the A&E industry when it comes to project delivery? Below is a summary of the findings from the study and read to the end to find out how to get a free copy of the report.  

Staff Shortages Affecting Project Management 

Looking at the challenges, especially compared to the prior year, it’s not surprising that staffing shortages and competing priorities are high on the list. However, staffing shortages were 40% last year and now are at 64%.  

The respondents were asked to rank their top three challenges. Those top three centered all-around staffing – 1) staffing shortages, 2) competing priorities, and 3) inexperienced project managers. These challenges may lead to burnout, more frustration or other challenges for the teams. Project managers are not focused on proactively managing their project because they are spending time figuring out how to get the work done.  

Improved Project Delivery Performance, in Some Areas 

Project delivery performance has improved with projects that are at or under budget. Those projects currently being reported as under budget went up almost six percentage points from prior year to 67.8%. However, the eight-year trend is showing a move in the wrong direction. Plus, on the schedule side, things aren’t looking as great with a decrease of more than six percentage points from prior year. The common theme from the project managers seems to be they are struggling the most when it comes to managing schedules. Schedule is the metric that is tracked the least and doesn’t have much visibility.  

These gaps in staffing and lack of visibility into project performance are affecting not only project managers, but the firms’ bottom lines. What new challenges are your project managers facing today? What’s being driven by clients and what internal processes or technology can be deployed to improve visibility and efficiency? 

Increased Emphasis on Project Management as a Discipline 

There were huge gains in the percentage of projects that follow a clearly defined project management process. In this year’s report, 44% of the respondents indicated that 75%-100% of their projects used a clearly defined project management process. Whereas, last year only 14% were in that upper tier of the majority of their projects.  

Another item the Deltek Clarity Study looks at is the project management office (PMO) or center of excellence. This year’s report indicates that this trend is moving in a positive direction. Overall, 15.4% of respondents have a PMO and that’s an increase of 5.4 percentage points over prior year. Leading the way are the large firms with 50% of them indicating they have a PMO up 20 percentage points from prior year. Though at 15.4%, that’s still less than a quarter of the companies that are using some kind of PMO or center of excellence to treat project management truly as a discipline. 

One of the things that’s important when it comes to project management is to celebrate when projects are going well. Firms often get wrapped up in the projects that get off course or fall behind schedule. Fortunately, the study does measure what’s going well in project management, and at the top of that list is managing client relationships with collaboration and communication.  

However, there’s still a majority of the respondents that don’t have a clearly defined project management process for all or even most of their projects. It’s a good opportunity to ask internally why aren’t processes being followed? Is there not a clearly defined process? Are the processes not aligned with the different types of projects the firm does such as small vs. large or task-order vs. lump sum? 

Proactive and Accountable Project Management Metrics  

What gets measured gets done, correct? The Deltek A&E Clarity report asks what project management KPIs are being tracked at the firm.  

At the bottom of what is being tracked are some of the scheduling metrics including estimate at complete, on-time delivery, and earned value management. At the top of the list are those KPIs often tracked by the financial leaders and include net revenue, profitability, average collection period for A/R aged and multipliers. Yet the financial metrics are retroactive. This might indicate that the lack of visibility or tracking for schedule and schedule variances might correlate with the increase in projects going behind schedule.  

Firms should be asking what metrics they should be tracking that can help them to right size or fix what may be going wrong in a project. How can firms make sure the project managers have the information they need to see where their projects stand at any given time? How can the information be visible and accurate? 

Making the Case for Project Management Technology 

While firms are moving more and more towards technology, the reliance of manual data entry and spreadsheets is going in the wrong direction, specifically when it comes to project management. At the top of the list of departments relying on manual entry is operations and resource management.  

The Clarity Study found that 61% of firms say that they’re still using Excel for planning projects and resources. 75% are using email as their primary project collaboration tool, and 88% are still using email as a primary method to share large files both internally and externally. 49% are not using construction specifications technology.  

All of these are ripe for business process improvement and better leveraging of technology for efficiency, but just where are firms planning to invest in this technology? Project management is at the top of the list, with nearly half of the respondents indicating that they will invest in project management technology in the next 12 months. 

Top Initiatives for Project Management 

When you look at the challenges and top initiatives for project management at A&E firms, issues such as hiring more qualified staff, defining capabilities and responsibilities as well as defining internal best practices and investing in internal project manager training are not surprising. Firms know they need to have great project managers.  

Use These Findings to Improve Your Firm 

The immediate next step is to download the full Deltek A&E Clarity report. Click the image below to grab a free copy of the report along with a scorecard to chart the firm’s results. Then use that to begin discussions around the firm’s net revenue forecasts, project budgets and schedules, etc. Ask about where the firm is struggling, where it’s doing well, and what are the opportunities for improvement. Finally, make sure that you’re reaching out to a Full Sail Partners’ consultant so that we can help you keep your business on course.