Top trends in Architecture & Engineering: Key findings from Deltek’s Annual Clarity Report

Did you know? 76% of firms are planning to accelerate their digital transformation in 2024. These firms are more than twice as likely to envision themselves as “advanced” and “mature” on the digital transformation maturity spectrum in the next three years.

But what does this mean for your business?

As A&E firms shift their stance on technology adoption, gaining buy-in for new solutions is no longer the number one barrier to adoption.

Deltek’s 2024 Clarity Report outlines how financial management strategies can help A&E firms build their technology stack to stay competitive in an ever-evolving industry.

In this article, we’ll delve into Deltek’s Clarity Report to explore how AI-enabled finance technology can help overcome manual processes and data inaccuracies, empowering you to focus on driving growth and achieving long-term success.

Embracing digital transformation in architecture & engineering

In their recent report, Deltek found that A&E firms struggle to balance the rising costs of labor with incoming revenue, making it difficult to steer their firms towards profitability.

In fact, Deltek’s Clarity Report found that 88% of A&E firms indicate being more selective about the projects they accept, as the cost of labor and the demand for data increases. And while the number of proposals awarded grew in 2023, the overall value of those contracts declined compared to last year. And firms were more aggressive in pursuing operational efficiencies and cost effectiveness.

Rising labor expenses are a direct result of increased demand for specialized skills, as well as inflationary pressure on wages. And while the cost of labor has been increasing, it has become more important to improve data collection times, which adds another layer of complexity to managing a firm’s finances.

As a result, finance leaders have shifted their focus to financial strategies in the form of digital transformation via AI-enabled finance technology to adapt to these changes. This shift is also reflective of A&E firms’ prioritization of fluid, technology-driven operational models to enhance operational efficiency and reduce costs.

In short, the priority for A&E firms in 2024 is to balance rising costs while capitalizing on revenue growth opportunities. Finance teams must make strategic decisions that address immediate financial pressures but also set the foundation for sustainable long-term growth.

Now, let’s explore why firms that strategically invest in technology are better positioned to maintain a competitive edge.

Building a strong case for technology investment

A&E firms operate in a complex environment with numerous projects, budgets, and timelines to manage. Implementing a financial planning and reporting tool can significantly enhance a firm's efficiency and strategic decision-making.

For A&E firms, challenges with financial management go beyond the frustration of sifting through spreadsheets or spotting an error after hours of work. The more systemic problem is how these inefficiencies affect your firm's potential. Here's why manual processes are holding you back:

• Time-consuming tasks - Manual processes eat up valuable time that could be better spent on strategic initiatives.
• Data inaccuracies - Errors in forecasts and reports undermine confidence in the data critical for decision-making.
• Data silos - Disconnected data fails to offer the broader context needed for insightful analysis.
• Hindered collaboration - Disparate data sources make it challenging to compile a coherent view of your firm's financial health.

Addressing these challenges isn't just about avoiding errors or saving time—it's about empowering your finance team to harness the full potential of your financial data.

Finance technology presents a solution by allowing A&E firms to reimagine how they capture, manage, and leverage financial data. Embracing automation and advanced financial tools can:

• Eliminate manual errors - Reduce inaccuracies and increase confidence in your data.
• Integrate disparate data sources - Provide a single source of truth accessible to everyone on the team.
• Enhance collaboration - Foster a unified response to risks and opportunities by enabling efficient teamwork.

Recognizing these challenges and opportunities, the next section will delve deeper into how investing in finance technology can fundamentally transform your firm's approach to financial management.

4 benefits of finance technology for A&E firms

Deltek’s Clarity Report emphasizes the importance of agility and technology innovation as key drivers of financial health and competitive advantage.

Deltek further emphasizes that there’s been a recent strategic focus on digital transformation, with firms looking to integrate new business applications and systems with AI capabilities.

So, let’s outline four benefits of adopting finance technology to support your A&E firms’ growth.

1. Driving strategic business development

Key insight: The overall win rate for competitive proposals dipped slightly by 0.5 percentage points to 49.1%, with medium-sized firms seeing a notable decline of 2 points.

In 2023, business development efforts were characterized by a stable win rate and a slight increase in overall capture rate – with firms expecting 11% year-over-year revenue growth.

However, many firms are still challenged by identifying new prospects, increasing competition and nurturing client relations – indicating a need for further investment in strategic relationships, thought leadership, and technological advancement.

Business development is about differentiating your firm from the competition, not just through the projects you win but through the relationships you nurture. Adopting finance technology, like a financial performance platform, can help ease these administrative burdens, freeing up more time for business development activities.

2. Enhancing project management efficiency

Key insight: Less than one-third of firms reported high visibility into schedule variance and client satisfaction.

Project management remains the backbone of successful A&E firms, with a clear focus on improving project delivery and utilization rates. Challenges like timeline management and cost control are being met with technology integration, aiming for better oversight and efficiency. This project management approach is vital for firms aiming to stay agile in the face of changing project demands.

3. Investing in human capital

Key insight: Overall employee turnover remained high but stable, with small and large firms experiencing increases of three and two percentage points, respectively, while medium-sized firms saw a decline of two points. High performers reported the lowest turnover at 12%.

Deltek’s Clarity Report highlights a significant challenge - finding and retaining qualified staff. The report emphasizes the importance of investing in strategic human capital management, including education on technology trends. Creating clear career pathways and fostering a culture of continuous learning are crucial not only for fulfilling HR objectives but also for sustaining innovation and maintaining a competitive edge.

Additionally, succession planning and ownership transition have become increasingly important. Deltek advises firms to develop budgets for these strategic investments. By focusing on career development and nurturing a culture of continuous learning and innovation, firms can attract and retain top talent effectively.

Investing in finance technology can further support these efforts by streamlining financial planning and reporting processes. This allows the finance team to allocate more time and resources towards strategic initiatives, including personnel development and training.

4. Transforming financial management into a strategic asset

Key insight: Developing budgets for strategic investments is a priority for 37% of firms. Financial planning tools are crucial for creating and managing these budgets effectively.

Deltek’s Clarity Report reveals a notable shift in the financial strategies of A&E firms, emphasizing technology-driven operational expenses. This pivot isn't just about cutting costs; it's about enhancing productivity and future-proofing businesses.

In a time when financial accuracy and efficiency are increasingly important, Deltek underscores the need for advanced financial planning and reporting tools in the form of finance technology. These tools go beyond compliance and operational efficiency, serving as strategic enablers that integrate financial insights into every decision and strategy, from project management to business development and beyond. By prioritizing the use of AI-enabled finance technology, firms can ensure robust financial management and strategic agility.

How Prophix One™ elevates Deltek users' capabilities

Now that you’re familiar with how finance technology can help your A&E firm maintain a competitive advantage, reduce employee turnover, and better manage your projects – let’s look at why Prophix One is the best solution for Deltek users.

Our Financial Performance Platform, Prophix One, integrates with Deltek to create one single point of entry where data flows between processes, improving visibility into key metrics around project schedules and revenue streams.

With Prophix One and Deltek, your A&E firm can automate budgeting, forecasting, and financial reporting – giving your finance team the ability to demonstrate strategic value, enhance collaboration, and foster a culture of data-driven decision-making. This integration also improves the accuracy and timeliness of your financial data, empowering you to be proactive, rather than reactive.

In addition, combining Prophix One and Deltek allows customers to:

• Uncover powerful insights and see trends by employee, project, client, or practice
• Gain insight into project benchmarks and KPIs, such as project yield, margins, and billable utilization with dashboards
• Integrate your P&L with your personnel plans
• Analyze scenarios to see how assumptions impact your revenue plans and forecasts
• Deliver comparative actuals and ensure consistency across your budgets, plans, and reports

And with AI Insights in Prophix One, you can instantly understand variances and trends, generate meaningful reports faster, and enhance collaboration through automated, accurate narratives around your data.

With the combined power of Prophix One and Deltek, you can look beyond your numbers to focus on what really matters – strategic planning and growth. This isn’t just about improving financial performance; it’s about setting a new standard for operational excellence in the A&E sector.

To learn more about how Prophix One and Deltek work together, watch our on-demand webinar.