Building Financial Resilience in Architecture, Engineering and Construction Firms: Lessons from Finance Leaders

March 20, 2025
Building Financial Resilience in AEC Firms

Faced with economic volatility, tight project budgets and shrinking margins, it can be difficult for built environment companies to sustain business growth. While growth may come easily during the good times, firms need effective strategies to remain financially resilient when things get leaner. But even in a tough market, new opportunities are constantly emerging, and implementing strategies for financial resilience enables firms to seize those opportunities with confidence and accelerate their growth.

For our recent webinar, we assembled an expert panel of financial leaders to discuss strategies and processes for weathering difficult economic conditions and powering business growth at built environment firms.

The discussion was hosted by Pouline Wagtberg, Managing Director Nordic and Head of Account Management EMEA/APAC at Deltek, and featured four expert participants:

You can watch the full discussion to get all the panel's insights, but, we've captured the key takeaways across three critical areas below.

Enhance Collaboration Between Finance and Operational Teams

For financial strategies and decisions to have their intended impact in the real world, it's vital that financial and operational teams constantly communicate with each other. A major factor in enhancing this collaboration is increasing the visibility of finance teams and leaders across the business.

"The days of finance being stuck in the back office with the doors closed are long gone. It's really important that we're a visible team and are seen as advisors to all parts of the business," Nick said. "We're constantly communicating with operational teams (including the fee-earning parts of the business) to understand what their pressure points and challenges are and how we can help in finance, whether it's to do with pricing to influence the profitability of the project or getting the bill paid."

While collaboration is vital, for it to be effective, teams must have a common language – and be talking about the same data. Gathering, sharing and acting on this data is much simpler if teams can access integrated systems that remove silos and enhance data flow throughout the business.

 

“The days of finance being stuck in the back office with the doors closed are long gone. It's really important that we're a visible team and are seen as advisors to all parts of the business.”

– Nick Lakhani FCMA, Chief Financial Officer, calfordseaden

 

"You can't run a profitable business if you're all working in silos," Della said. "We must also all speak the same language. That means making sure operations teams understand the finances and the finance team understands the business and is using the same software, so we're all talking about the same numbers. Then we can spot things happening early on and mitigate any risk we've identified."

"In terms of remaining resilient through this challenging trading climate, data flow is very important," Nick added. "We're in a volatile climate – projects change and get delayed – and we need to inform other parts of the business when projects change from their original scope. It's important that this leakage is captured at the early stage of the project rather than when it's completed."

Monitor the Right KPIs to Improve Financial Performance

As the age-old saying goes, "What gets measured gets managed." To remain resilient in a volatile market, built environment firms must define and measure KPIs that meaningfully affect the financial performance of their projects. However, those KPIs will look different at every company, and although they're monitored and reported on by finance teams, they must be driven by the business.

"We shouldn't have the finance team being the tail wagging the dog when it comes to KPIs," David said. "Different non-finance people – CEOs, operational directors, project managers, divisional directors – see things and run things in different ways. The question you should always ask of the business is, 'What KPIs do you need to run an effective portfolio of projects?' If the data is structured and available, finance can deliver every KPI under the sun. But as to which is the best for your business to operate on, that must be left to the non-finance people to decide what works for them to deliver their programmes."

 

“The question you should always ask of the business is, 'What KPIs do you need to run an effective portfolio of projects?'”

– David Pestell, Finance Director, QODA Consulting

 

To build financial resilience, architecture, engineering and construction firms are beginning to evolve their approach to KPIs, taking a more forward-looking and proactive approach to the things they measure.

"One of the things I've seen recently is a push away from lag indicators – KPIs that tell us about something that's happened historically – to lead indicators that tell us about the pipeline of new contract opportunities, for example," said Claire. "Tracking those can often be a better indicator of your performance overall rather than looking backwards."

Claire has also observed a trend in the built environment sector towards firms evolving their KPIs throughout their growth journey. "Firms have a suite of KPIs that they track so that the leaders of the business know roughly where they are. I'm also seeing firms adding new KPIs for a very short time to monitor things that are being focused on in that moment, like cash flow, for example," she explained. "There's a push towards having a few KPIs that people are actually influencing day-to-day to try to solve a problem or achieve growth."

 

“Firms are adding new KPIs for a very short time to monitor things that are being focused on in that moment, such as cash flow. There's a push towards having a few KPIs that people are actually influencing day-to-day to try to solve a problem or achieve growth.”

– Claire Burden, Partner, Evelyn Partners

 

Nick agreed that it's important to look forwards as well as backwards with KPIs. "Most professional services firms have three components: people, clients and money," he said. "So, we look at staff turnover, absence and satisfaction because if you have happy, motivated people, you'll have happy clients who get a good service – then the numbers will take care of themselves. On the client side, we look at the rear view, which is about profit, revenue, margin, etc., and the front view, which is about client conversations, pipeline value and new contracts signed. It's a challenge to get accurate data around this, but that doesn't mean you don't try – it gives you an indicator of future work levels on the money side."

Deliver Financially Successful Mergers and Acquisitions

Mergers and acquisitions can be an effective way for companies to accelerate growth and weather economic storms. However, there are many factors that firms should consider during the research, selection and preparation phases of M&A initiatives.

"At the outset when you're doing your research, be very clear on your criteria for acquisition," David said. "I've seen numerous examples when companies slightly stepped outside their criteria, and nine times out of 10, they failed. So, before you even start entering NDAs and speaking to people about M&A, you need to understand your criteria so you can narrow down the market of who you're going to approach. Everything leads on from that. At our firm, finance will get involved after due diligence, when we start looking at where the synergies are and making sure we don't rush the integration, which de-risks the client and culture piece. Then you have to pick your timing and decide as a group how to go forward."

The panel agreed that after identifying the right M&A opportunities and completing complex deals, the hard work really starts during the transition. Integrating systems, processes, people and cultures must be handled carefully.

"The hard work is done after the deal's complete and for the next year when the companies are integrating," Claire said. "You need to think about data flow, about how you work with your client base, and about the processes between finance and the rest of the business."

"There's lots to be done in advance and then afterwards, integrating your processes and systems," Della concurred. "But it's the people that integrate; if you've got a joint culture that works well together, you can work out the rest as you go. So, put the culture before the numbers – people are more important."

 

“It's the people that integrate. So, put the culture before the numbers – people are more important.”

– Della Hudson, Chief Executive Officer, Minerva Accountants

 

Watch the Full Discussion for More Insights

To get all the experts' insights from this fascinating discussion – and discover more ways you can build financial resilience in your firm – watch the full webinar: Beyond Spreadsheets 2025: Building Financial Resilience in Architecture, Engineering & Construction Firms.


 

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