A&E Market Flourishes Despite Staffing Issues

The 43rd Annual Deltek Clarity report on the A&E sector finds flourishing project pipelines and top-line revenue growth weighted down by continuing staffing shortages and tighter margins.

The 43rd Annual Deltek Clarity report on the A&E sector finds flourishing project pipelines and top-line revenue growth weighted down by continuing staffing shortages and tighter margins.

Project pipelines are flush and revenue projections are up, yet the annual Deltek Clarity: Architecture & Engineering Industry study sees increased labor costs, staffing challenges, and mounting concerns about inflation as rising headwinds that could potentially put a dent in  margins and profitability.

Business optimism among A&E firms soared this year, with study respondents estimating an 18% spike in growth driven by favorable market conditions, including in the public sector for water resources, transportation, and energy/power. Nevertheless, given greater global and economic challenges, A&E firms need to be strategic about the opportunities they take and must put greater emphasis on targeting technology investments and initiatives that can help close the talent gap and foster the requisite skills sets to keep pace with competition and meet customer demands. The study found A&E firms prioritizing technology investments in core business areas like project execution and project management coupled with enabling capabilities such as augmented and virtual reality (cited by 34% as a top priority) along with geolocation and Internet of Things (IoT).

Geolocation capabilities are primarily being used in project execution and building information management (BIM) capacities. From a BIM perspective, companies are leveraging geolocation functions to geo-reference critical assets in BIM models to improve how the overall model is displayed, according to Megan Miller, product marketing director at Deltek. IoT is being integrated with BIM to create digital twins of physical buildings, helping to foster a more digital project delivery environment, she adds. Currently, however, implementation of digital twins is still quite immature at A&E firms, called out by only 18% who said the technology was very important or somewhat important to future strategies.

While the A&E industry has traditionally solved workload problems by hiring more people, the current talent shortage requires companies to look to technology to improve efficiencies, streamline processes, and complete tasks—especially those that don’t require human manual input, Miller said. “Project managers and business leaders have an opportunity to reimagine how projects are completed and identify where there are blockers or delays in processes simply due to inefficiencies,” she explains. One such example: The standard field reports that have traditionally been paper-based, requiring transcription of handwritten notes. “By leveraging technology that is readily available, these reports can be done in a fraction of the time by one person,” she adds. “There are plenty of other opportunities to leverage technology to simplify project delivery and improve efficiency rather than trying to solve the problem with more people.”

Solving problems by adding more people is particularly difficult in the current hiring climate. Finding and retaining qualified staff was a top challenge for 78% of respondents to the Deltek survey, so addressing near-term labor issues requires more of a strategic and purposeful investment, Miller says. Forty-three percent of firms surveyed identified hiring more staff as a top initiative as most respondents faced attrition across multiple areas of business, including designers, technical staff, project managers, and IT staff. To turn the tide on recruitment and retention, companies are actively increasing salaries and offering hiring bonuses.

“If doesn’t seem like people are leaving the industry, but rather moving from one company to another,” Miller says. “With the influx of project backlogs and pipelines, there are more new positions being created, but not enough people in the industry to fill demand.”

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Beth Stackpole's avatar
Beth Stackpole

Beth Stackpole is a contributing editor to Digital Engineering. Send e-mail about this article to [email protected].

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