What Are Tomorrow's Clients Expecting From A&E Firms?

Posted by Chris Duddridge on October 24, 2018

Client Relationships AE

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The way that clients procure architecture services is changing, and professional services firms need to keep up with shifting market trends in order to remain relevant and profitable.

Deltek’s research report ‘Insight to Action – The future of the professional services industry’ highlights several shifts in client behaviour that will impact on how business is conducted in the future.


 

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Client Loyalty Is Waning

One is a reduction in client loyalty, because clients are becoming ‘pickier’ and more likely to be lured away by new competitors. Deltek’s global research found that more than 1-in-3 firms had lost business to boutique providers.

We also found that clients are more willing than ever before to use different providers for different tasks, rather than putting all their eggs in one basket, with a single supplier. That shift further fragments what was previously a traditional and loyal customer base.

So, Architecture and Engineering (A&E) firms need to be at the top of their game – and at the forefront of digital transformation - to remain competitive in this new marketplace.

In this regard, our research highlighted a potential major problem: a serious disconnect between the intentions of the heads of A&E firms and their project delivery leads, around future technology aspirations. The research found that 19% of CEOs said they wouldn’t invest in ANY emerging technologies over the next five years, but more than half of project delivery leads wanted to make those important investments.

Doing More For Less

Another troubling development is the continued pressure on pricing models, as corporate customers push back against concepts such as billable hours. They are also making greater demands for well-defined and known outcomes in the form of fixed fees, and asking for greater transparency around costs.

Combined with the more competitive landscape outlined above, the trends around professional services fees are making it harder for A&E firms to maintain healthy profit margins.

 

'Deltek’s global research found that more than 1-in-3
firms had lost business to boutique providers'

 

 

Complexity Is Going Up, Not Down

While fees are trending downwards, projects and their delivery programs are increasing in complexity, creating a difficult tussle between costs and profits, which many firms say they are struggling to manage satisfactorily.

Deltek’s research reported that 63% of decision-makers identified ‘increasing complexity of projects’ as a top challenge for firms, over the next 5 years.

Add to that the fact that new challenges are arising on multiple fronts, including the increasing adoption of BIM, which adds levels of complexity; the growing demand for more intelligent buildings; and designs that push previously accepted boundaries.

All of these factors require different and nuanced approaches if firms want to prosper in what is becoming an increasingly challenging operating environment.

What’s The Upshot?

Project Overrun

The main lesson for firms that wish to remain relevant and profitable is to bolster their agility and transparency, so that they can provide clients with the level of data and reporting they want on projects, and maintain the ability to absorb cost overruns, or initiate variations for out-of-scope changes.

The introduction of new technologies that streamline business practices has the capacity to pay double dividends for Architecture and Engineering professional services firms. These technologies can deliver efficiency rewards, and provide more visibility across past and present performance, to guide future decision-making.

In short, putting the right solutions and tools in place will give professional services firms access to the data and information they need to survive and thrive, in a business environment where client demands are impacting on loyalty, and projects are becoming increasingly complex.

To properly serve the clients of tomorrow, it’s imperative to get to grips with technology and its transformative capacity, today.

 

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Professional Services Trend Report

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