25 AEC Industry Insights from 2025 That Will Shape Firm Success in 2026

What did 2025 look like at your firm? Here at PSMJ, we served clients in over 45 countries, expanded our team by seven employees, and delivered over 250 training sessions, webinars, and conferences to architecture, engineering, and construction professionals worldwide.

Through thousands of conversations with AEC firm leaders, comprehensive benchmark surveys, and hands-on consulting engagements, we identified critical trends reshaping how successful firms operate, grow, and compete. Here are 25 key insights we're carrying into 2026.

1. For Onboarding, the First 90 Days Matter Most.

New hires make subconscious "stay or go" decisions within their first 90 days. Yet most AEC firms still rely on outdated, checklist-based onboarding programs. The firms winning the talent war treat onboarding as a strategic retention tool—using technology to track progress, assigning dedicated guides, and balancing administrative tasks with meaningful social connections to structure your first 90 days for maximum impact.

2. Let Marketing Do Its Job!

Successful AEC firms recognize marketing as a specialized discipline requiring expertise to drive real business development results. It's vital to focus on consistent messaging and seizing opportunities quickly when they align with your brand.

3. Knowledge Management is More Than Just SOPs

The most innovative firms use AI-powered knowledge management systems that go beyond traditional standard operating procedures. Leading AEC firms are implementing AI for knowledge management to reduce project errors, accelerate training, and prevent knowledge loss when senior staff retire. Hear more about Knowledge Management at 2026's TalentMax conference.

4. While Broader Uncertainty Abounds, the AEC Industry Continues to Deliver Strong Performance!

Our Quarterly Market Forecast Report Q3 2025 proposal tracking data revealed dramatic regional variations in RFP activity—some markets up 40% year-over-year, others down 25%. Firms that thrived monitored trends closely, adjusted business development strategies in real-time, and strategically pursued work where competition was lighter. In unpredictable markets, agility beats relying on traditional approaches to work.

5. Work That Matters MATTERS to Your Employees

The 2025 AEC Building a Better World Award honorees demonstrated that firms working on projects with genuine social impact have significant advantages in attracting and retaining talent. Today's AEC professionals—especially younger generations—want work that contributes to something meaningful beyond billable hours. Firms that articulate how their work improves lives consistently outperform peers in engagement and retention.

6. Even with an LOI, You Should Still Use an M&A Advisor

Having a Letter of Intent doesn't mean the deal is done—this is when things often fall apart. Our M&A advisory team consistently sees firms make costly mistakes during due diligence and negotiations. Professional advisors bring deal experience that most AEC leaders lack, navigating earnout structures, liability protection, and integration planning. You can learn more about the pros of having an M&A Advisor at our 2026 M&A Summit.

7. If You're Not Thinking About Your Exit Strategy Long Before Retirement, You're Too Late

Our Thinking About AEC Ownership Transition? webinar revealed that meaningful exit planning requires a minimum of 5-7 years. Firms that execute successfully start early—grooming leadership, cleaning cap tables, documenting systems, improving metrics, and building transferable relationships. Owners who wait until retirement discover severely limited options and lower firm value.

8. You Can't Improve KPIs if You Can't Track Them

We consistently encounter AEC firms lacking basic systems for tracking utilization rates, project profitability, or productivity metrics. Yet firms implementing proper tracking systems—even simple ones—consistently improve performance by 15-20% within the first year. Our On-Demand Utilization Booster Strategies Webinar demonstrates practical strategies for tracking systems that provide visibility for data-driven decisions.

9. Entry-Level Electrical Engineers Are Paid SIGNIFICANTLY More Than Entry-Level Architects

Our 2025 AE Management Staff Compensation Benchmark Survey revealed that entry-level electrical engineers earn 18-25% more than entry-level architects—a gap that's widened over three years. This creates challenges for multidisciplinary firms maintaining internal equity while remaining competitive. Understanding these benchmarks is critical for developing effective compensation strategies.

10. Firms That Prioritize Client Experience Consistently Outperform Peers

The 2025 AEC Premier Award winners proved that extraordinary client satisfaction drives both revenue growth and talent retention. These firms systematically measure satisfaction, quickly address concerns, and build consistent processes. The data from our 2025 AE Financial Performance Benchmark Survey: firms in the top quartile for client satisfaction achieve 23% higher revenue growth and 31% better employee retention.

11. Documentation is KEY to Efficiency (and AI CAN Help)

Poor documentation costs AEC firms millions annually in repeated mistakes and knowledge loss. AI tools now make documentation effortless—automatically capturing meeting notes, generating summaries, and creating searchable knowledge bases. Leading firms leverage AI for documentation to improve efficiency and attract talent seeking technologically sophisticated employers. AEC INNOVATE 2026 is all about improving your firm with technology & AI. 

12. The Best-Managed AEC Firms Aren't Chasing Vanity Metrics

Analyzing the top 20% of firms for our 2025 Circle of Excellence awards, we found that these 65 exceptional firms aren't obsessed with rapid growth or headcount. They've mastered fundamentals—profitability, overhead control, efficiency, and smart business development. As PSMJ President Gregory Hart noted, they "move with purpose while others hesitate, execute with precision while others stumble."

13. 2025 Brought Fewer "Retention Premiums" and More Discipline

After years of panic-driven bonuses, 2025 marked a return to strategic compensation. Our 2025 A/E Bonus & Benefit Plans
Benchmark Survey Report showed firms moving from retention premiums toward performance-based incentives tied to measurable results—project profitability, client satisfaction, business development success.

14. Top Performers Never Stop Executing

The 27 firms achieving Platinum Status share one habit: relentless execution. They continuously compare performance against industry standards, identify gaps, and adjust strategies. Benchmarking isn't compliance—it's competitive intelligence revealing opportunities others miss.

15. Industry Stability Finally Returned as Turnover Rates Dropped

Our 2025 AE Financial Performance Benchmark Survey showed voluntary turnover dropped to 11.3%—the lowest since 2019, down from pandemic peaks of 17-18%. Firms with the lowest turnover (under 8%) share characteristics: strong onboarding, clear career paths, meaningful work, competitive compensation, and genuine work-life balance.

16. Investing in Operations Departments is Key

When Turner Fleischer grew from 45 to 230 staff, Principal/CFO/CEO Ellen Bensky created seven operational departments. "Our operation departments are actually the foundation of our studio," she explained. High-growth firms don't just add project staff—they build operational infrastructure that supports those teams from firms that have successfully scaled. Learn Bensky's trade secrets at AEC TalentMax 2026.

17. Using AI to Prevent Overwork is the Most Productive Use of Your Time

The best AI implementations in 2025 focused on preventing burnout, not replacing workers. Firms use AI to automate repetitive tasks, streamline documentation, and free people up for higher-value activities that require human judgment, which can result in hours of weekly time savings per employee. AEC INNOVATE 2026 is all about improving your productivity with specific AI tools. 

18. You Can't Outwork Commoditization, but You Can Outthink It

Perhaps 2025's most important insight: 80% of AEC firms remain trapped in a price war. Meanwhile, a select group identified unique competitive advantages and built positioning strategies around those differentiators. Our webinar Stop Competing on Price Alone: Turn Your AEC Firm’s Value Prop Into a Strategic Growth Engineshowed these firms win by making themselves the obvious choice, not the cheapest option.

19. Rethink the Project Management Manual

Surprising finding: many large AEC firms invest heavily in PM manuals, but only a few use them regularly. Our research shows zero correlation between having manuals and project success. The best firms invest in continuous training and mentorship instead. Redirect manual development budgets toward hands-on PM training programs that develop practical skills people actually use.

20. Don't Underestimate the Power of FUN!

Our AEC THRIVE Bingo campaign proved that even senior executives appreciate gamified engagement strategies. The lesson? Don't underestimate the power of fun, interactive approaches to drive participation and build community. Sometimes, the most effective leadership strategies remind people why they enjoy what they do.

21. Overhead Costs Are Everyone's Responsibility

Most new employees don't realize their salary represents only a percentage of their total cost when including benefits, software, office space, and support. This lack of financial literacy leads to wasteful behaviors that compound across organizations. Forward-thinking firms get faster ROI on payroll investments. Attend our 2026 AEC Financial Management Workshop to get to positive cash flow faster.

22. Building Models and Structure is Vital for Company Culture and Growth

Barriers weren't external—they were internal structural issues: governance stifling decisions, cultures that can't scale, BD approaches optimized for volume not value, and strategic plans gathering dust. Breakthroughs came from focusing on fundamentals: building leadership structures enabling growth, creating BD models attracting premium clients, and identifying organizational blind spots. Firms that attend our Napa Valley AEC Business Accelerator Lab will get the opportunity to dig deeper into this topic.

23. It's Time to Consider Hiring Gen-Z Long Term

The narrative around Gen-Z has been negative—entitled, job-hoppers, lacking work ethic. But Gen-Z employees who receive proper onboarding, clear career paths, and meaningful work demonstrate stronger loyalty comparable to previous generations. The difference? Gen-Z workers are less willing to tolerate poor management or dead-end positions.

24. There's a "Sweet Spot" for Your Compensation Rates

Common mistake: firms either significantly underpay (losing talent) or overpay (destroying profitability without improving retention). Our analysis of sustainable compensation identified a "sweet spot" that maximizes retention while maintaining healthy margins. Attend Jared Jamison's webinar in January to learn more!

25. PSMJ PRO is the Best Leadership Tool to Invest in for 2026

What separates high-performing leaders? Access to a peer network facing similar challenges. PSMJ PRO provides a community where you can ask sensitive questions, get confidential advice, and learn from others' experiences without worrying about competition. Members consistently report that single conversations save them from costly mistakes or reveal missed opportunities.

Ready to implement these insights in your firm? Explore our full library of resources, training programs, and consulting services designed specifically for AEC firm leaders. Or join the conversation in PSMJ PRO to connect with peers who are tackling these same challenges.