The Ascent of the Tech-Forward AEC Firm

Lucas Hayden
Posted on: 02/13/23
Written by: Lucas Hayden
Topics: Technology

Intelligent use of technology, data gives firms a big edge, according to Unanet’s latest benchmarking study.

Some architecture, engineering and construction firms rise to the top of their class because they excel at winning new business. Some stand out for their ability to attract and retain talent. Others regularly post higher profit margins than the competition. And what do many of these top-performing AEC firms have in common? They are progressive in their use of technology. 

Findings from Unanet’s latest benchmarking report for the AEC industry, the AEC Inspire Report 2022-2023 (download a free copy here), establish a direct connection between a firm’s embrace of technology, its overall performance and its outlook for the future. Simply put, it pays to be a tech-forward firm. 

 What does being a tech-forward AEC firm look like in practice? To qualify as tech-forward, companies had to meet at least three of these four criteria: 

1. They consider themselves “very data driven.”  
2. Their tech systems and applications are fully or mostly integrated. 
3. They’re cloud-enabled, with at least half of their software and business apps based in the cloud. 
4. Most or all of their tech tools are mobile-enabled. 

Under these criteria, less than one-third (32%) of the 395 AEC organizations that Unanet surveyed for the AEC Inspire report qualify as tech-forward. In particular, we found that firms in the tech-forward minority:  

Have a mastery of their data. Inside tech-forward firms, data, and the insight it yields flow unimpeded and multi-directionally. This enables a firm to allocate resources more efficiently, manage projects more effectively, maintain a better handle on the KPIs that fuel project and firm profitability, more closely monitor and manage the client and employee experience, and strategically plan more effectively over various time horizons.  

Are big on integration. Their digital infrastructure is fully integrated, their organizational “nervous system” runs on integrated apps, and their people are empowered in their work by automation, information and streamlined processes.  

Are cloud-forward. Having key business applications and tools in the cloud offers scalability, efficiency, and security advantages relative to on-premise solutions.   

Provide from-anywhere access to digital tools and data. With hybrid work environments likely here to stay in a business in which employees often work in the field, it’s essential that AEC firms offer their people ready remote and mobile access to the same digital tools, systems and data they’d have access to in the office.  

As the AEC Inspire report findings make clear, qualities like these translate directly into better performance. Let’s look in more detail at some of the areas where tech-forward firms outperform their peers, and some of the steps firms can take to leverage technology and data and enjoy the benefits of being tech-forward themselves. 

 Accounting & Finance 
Tech-forward firms vs. their peers: 
• 67% of tech-forward firms project a profit rate of at least 20% in the next 12 months, compared to 52% of tech-static firms. 
• 14% of tech-forward firms report a direct labor multiplier of at least 3.5 over the past 12 months, compared to 4% of tech-static firms. 


Steps to take today to become more tech-forward: 
1. Implement stronger project accounting controls to avoid errors and delays in billing. 
2. Streamline invoicing and payments, such as by automating AR and AP processes using integrated online payments, approval workflows, etc. 
3. Ensure accounting/finance solutions are easy to adopt and user-friendly. 
4. Provide interactive analytic tools that make it easy for people to drill into and draw insight from data, and measure progress relative to KPIs (key performance indicators). 

Execute Projects Successfully 
Tech-forward firms vs. their peers: 
• About half of tech-forward firms consider their project-management and resource-management processes very mature, compared to one-fifth of tech-static firms.
• Half of tech-forward AEC firms reported that recruiting and maintaining appropriate staffing
levels have improved since the pandemic, while among tech-static firms, almost half (46%) indicated they have done worse in this area since the pandemic. 

Steps to take today to become more tech-forward: 
1. Become more agile and proactive in managing projects, prioritizing a more flexible approach. 
2. Strive for more collaborative solutions that enable people to work together to create positive outcomes. 
3. Automate processes wherever possible. 
4. Gain live project insights so the right people understand exactly where things stand with a given project.

Capture Your Market 
Tech-forward firms vs. their peers: 
• 17% of tech-forward firms report a project win rate in the 75-100% range over the last 12 months, compared to 9% of tech-static firms. 
• 27% of tech-forward firms expect their win rate will be in the 75-100% range for the next 12 months, compared to 13% of tech-static firms.  
• 34% of tech-forward firms report a capture rate higher than 50%, compared to 21% of tech-static firms. Capture rate is the total dollar value of the projects a firm wins as a percentage of the total value of the projects on which a firm bids. It’s a powerful metric for its ability to gauge the extent to which a firm is winning not just any business, but the right business.  

 

Steps to take today to become more tech-forward:  
1. Become more efficient and effective at developing proposals. An integrated CRM system can help in this regard. 
2.   Identify the client relationships that bring your firm the most value, and work to strengthen them. 
3. Cultivate a collaborative knowledge hive, where institutional knowledge is actively captured and readily available to people across the business. 
4. Develop capabilities to better predict your pipeline to inform forecasting, decisions about resources, etc.  

The tech capabilities that can enable an AEC firm to outperform its peers in project outcomes, business development and the bottom line are well within reach. With the connection between the intelligent use of technology and overall performance now clearly established, firms have plenty of reason to seek out those capabilities so they, too, can start reaping the benefits of being tech-forward. 

Lucas Hayden is Director of AEC Strategy for Unanet, a leading provider of project-based ERP and CRM solutions purpose-built for architecture, engineering, and construction firms, and government contractors.  

 For additional in-depth analysis, actionable insight and best practices from the AEC Inspire report, check out Lucas’s on-demand webcast here and download a free copy of the report here 

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