The 38th Annual Deltek Clarity A&E Industry Study

Posted by Deltek on June 5, 2017

Deltek Clarity A&E Industry Study

Recently Deltek kicked off the first webinar in the 38th Annual Deltek Clarity A&E Industry webinar series. In this webinar, Deltek’s Megan Miller and Brian Siefkes provided an overview of the Deltek Clarity A&E study and shared highlights from each of the four sections: Financial Performance, Business Development, Project Management and Talent Management. 

This Year’s Participating Firms

The Deltek Clarity A&E Industry study is produced in collaboration with ACEC, ACEC-Canada and SMPS.

This year over 550 US and Canadian A&E firms participated in the study. This is double the number of firms that participated last year! A good mix of firm types and firm sizes participated in the study. This year in terms of firm types, the breakdown was 26% architecture firms, 60% engineering firms, and 15% other (i.e. design, consulting etc.).  When looking at the size of participating firms, 39% were small firms (1-50 employees), 37% were mid-sized firms (51-250 employees) and 24% were large firms (251 plus employees). The results are broken out this way so that firms can compare their performance to firms of a similar size and firm type.  High performing firms are also broken out in the study for additional analysis.

Here are just a few of the highlights that Megan and Brian covered in the overview webinar.  For much more detail be sure to watch the drill down webinar for each section and dig into the report.

Financial Management Highlights

“Steady and predictable” is a good way to summarize the results from the Financial Management section of the Deltek Clarity A&E Industry study. Overall, firms’ financial metrics were flat to slightly up, revealing an industry that is holding its course financially. The top challenges firms said they faced in terms of financial management were forward facing, highlighting the benefits of a stabilized market.

The top financial challenges facing A&E financial leaders over the next 2-3 years shifted significantly with increasing profitability holding steady at the top of the list, but followed by managing growth, managing merger & acquisition activity and succession planning. The ongoing exodus of Baby Boomers, who typically hold the firms’ top positions, is driving a renewed focus on succession planning.

The 10 year trend for Operating Profit on Net Revenue was a bright spot.  At 13% we are back to where we were in 2007.  The 10 year trend for Utilization also looks good, with Utilization hovering in the 60% range (up from a low of 54% in 2010.) The 10 year trend for the Overhead Rate shows a nice steady decline since 2011.

So where do you stand compared to other firms in terms of financial KPIs?  When you download the report you will see it contains a wide variety of financial KPIs from the Income Statement and Balance sheet, with detail on each metric and how it was calculated. This will help you determine what comes next for your firm and what you should be focused on in terms of financial management. 

<Register for the Deltek Clarity Financial Performance webinar>

Business Development Highlights

This year we’re seeing a shift in business development responsibilities.  Firms are putting a greater focus on client relationships, which is good.  The challenge here is that firms have limited time and resources for business development and therefore need to focus their efforts wisely to be effective.

In terms of market outlook, there appears to be optimism in the markets.  However, there was a significant shift in how firms prioritized the top markets this year. This is likely due to a shift in priorities from the previous administration to the current one.  Some of the things at the top of last year’s rankings fell to the bottom, and others at the bottom last year shot up to the top this year.  Be sure to participate in the Deltek Clarity Business Development webinar where we will cover these trends in more detail.

Learn tips on how to make your clients a priority.  Find out where you may be wasting precious business development time and how to better focus your efforts on the right clients, projects and market.

<Register for Deltek Clarity Business Development Webinar>

Project Management Highlights

Project management skills are often the difference between projects that stay on or under budget and those that do not. Firms know this and it’s evident by the fact that the study showed the industry is investing more in project managers. Companies are offering their project managers more internal resources, formal training, access to project management best practices, mentor programs and external certification.

With firms investing more in the right places, it is no surprise that we are seeing a sharp increase in project management maturity.  This comes at a crucial time given the war for talent continues and the talent pool is dwindling.  Given a short supply of good candidates, firms are taking it upon themselves to mentor the talent they have.

There was also an uptick in the number of projects coming in at “on or under budget” (73%), which represents a 5% jump from last year! This can also be reflective of the growing project management maturity we are seeing across firms.

So where do your projects stand?  Do you know the right KPIs to be tracking to help you get in front of the financial performance of your projects?  Are you maximizing the efficiency of your project managers by giving them the right tools? Are your top project management challenges the same as those who participated in the study?  Join Deltek for the Deltek Clarity Project Management webinar where we will drill into these results in more detail.

<Register for Deltek Clarity Project Management Webinar>

Talent Management Highlights

When we look at the Talent Management overview it’s no surprise that the war for talent rages on.  A lack of available talent remains the #1 challenge firms face in talent acquisition. With these kinds of results, it’s no wonder issues like employee morale, work/life balance and employee retention have risen to the top of HR challenges firms are facing. Knowing the battle for talent is fierce, A&E companies are putting a heightened focus on retention, and as part of that are exploring ways to improve the culture within their firms. The fact employee turnover dropped this year could indicate firms are gaining some ground here.

As we said earlier – one of the challenges firms have been focused on is growth. The fact that staff growth doubled to 6.9% this year is evidence of that. This growth trend also signals a high level of optimism firms have in the future.

Firms are also reevaluating their HR technologies to streamline workflows, automate processes and decrease the time it takes to ramp new employees to billable status. So what can you do to improve your talent management processes?  Looking across your firm do you know the bottlenecks or gaps you should be focused on?  Are you using technology effectively for talent management, or is a lack of the right tools hindering employees at your firm?

Learn how your firm compares to your industry peers in terms of Talent Management.  Register for the Deltek Clarity Talent Management webinar where you will learn tips for improving your firm’s talent management practices and processes.

<Register for the Deltek Clarity Talent Management webinar>

All registrants for the Deltek Clarity webinars will receive a copy of this year’s complete Deltek Clarity Industry study with succinct analysis on more than 50 A&E specific KPIs. 

The Deltek Clarity webinar series includes a deep dive into all areas of the report so be sure to register and to share them with your colleagues to gain additional insight and help your firm succeed.