Name: From Insight to Action: What 2026 Reveals About the Future of A&E Firms
Uploaded: 2026-09-22T19:30:44.890Z
Duration: 1 h 1 min 48 s
Description: From Insight to Action: What 2026 Reveals About the Future of A&E Firms

Transcript for "From Insight to Action: What 2026 Reveals About the Future of A&E Firms": Hello, everyone, and thank you for joining today's webinar from Insight to Action. Before we dive into the content, please note the housekeeping notes that you have on the screen here. If you have any issues during this session, I encourage you to submit a a question into the q and a box, and our team would be happy to help you with those. Throughout the session, you can also submit questions for our speakers, and we'll take time at the end, hopefully, to get to some of those questions. Or we'll follow-up with you if we run out of time. If your question or if your question is specific in nature, we'll make sure that we get that to you as well. In today's session, we have a panel of speakers that are going to look at what's happening in the architecture and engineering industry today. We're gonna take a look at what the data is telling us and really how we can use that data and insights to start thinking about and plan for the strategy moving forward. In this webinar, we'll look back at some of the important metrics from the Deltek CLARITY study, and we're gonna pair those with some industry leading research so that we can highlight the trends and discuss what firm leaders should be thinking about now as we start to think about, the year ahead. The focus really is to help connect the dots between just the data and the actionable information and your strategy. My name is Megan Miller, and I'm a senior director at Deltek and where I focus on our industry benchmarks and trends, specifically related to the architecture and engineering industry. Prior to coming to Deltek, I worked in the A and E industry for more than a decade, and I continue to focus on how this data really can be a catalyst for conversations within your business. I'm excited to be joined today by Daphne Bryant, the executive director at ACEC research in Research Institute, and Michelle Russo, vice president of research for the American Institute of Architects. These incredible ladies are gonna bring forward a great perspective for the architecture and the engineering sides of the industry and really help to identify maybe some commonalities and where there's some unique trends that might impact just a segment of the industry. So before we dive into this, I would like to give each of you just a minute to introduce yourself a little bit more than what I did there. So, Michelle, can we start with you? Sure. I'm so happy to join you. I love doing this every year, and I get the fortunate honor of representing our economic market research and our architectural design research here at the AIA as well. Awesome. And, Daphne? Thank you, Megan. Thanks for having us. And, Michelle, always great to be with you on this. Looking forward to the discussion and, sharing some of our latest research, both economic and, a recent study around AI that I think will, lend itself well to the conversation. Great. Thank you both for that. So if we look at our agenda for the for today, as firms are approaching the last quarter of this year, we want to look again back at some of those key data points, dive into some current trends, and focus on what this means for your strategy as you head into 2027 and beyond. We'll take a look at the industry and then talk about a few key topics that should be part of your strategic planning, your business planning, those strategic conversations. We'll look at things like AI and where the industry is heading related to AI for projects and for business operations. We'll talk about business development and project delivery and how they're under additional pressure and what some of that, how that's impacting firms. And finally, we'll talk about how we can take all this data and apply it in ways that'll help you to set your company up for success and to really help develop the right strategy for your company, into the year ahead. As I mentioned before, as time allows, we will take some of those questions that you have. So make sure throughout this, if something piques your interest or you're just curious about something, for me or Michelle or Daphne, go ahead and put those into the q and a box, and then we'll answer some of those or we'll take those offline at the end, after the session if needed. One thing that I think is important before we dive into the different topic areas is a quick reference on firm size. And as Michelle and Daphne and I have talked about these different, trends over the years, one of the things that always comes forward is how each of these different groups may look at firm size a little bit differently. So I wanted to put this together for you as a reference so you can see, first, for ACEC research, the breakdown of sizes of small, medium, and large as well as very large, and just note the employee count that you see for each of those. For Deltek Clarity, our small firms are under 50, large firms are above two fifty, and medium fits right there in the middle. And then for AIA, the small firms are less than 10, large firms are more than 50. So just wanted to give you that context as you hear Daphne, Michelle, and I talk about firm size so that you can see where you fit into each of those and and each part of that conversation. So let's start by looking at the state of the industry and what the data told us coming into this year and how some of that data is playing out in 2026. We start by looking at the Deltek Clarity data. Firms were forecasting a nearly 10% year over year net revenue growth in 2026. So they're really looking at what their net revenue was in 2025 and then what the expected growth was year over year coming into this year. Firms were also reporting backlogs that were softening. They were down nearly three months compared to the same time in the previous year. We've seen declines in utilization, operating profit, as well as signs of slower staff growth, higher turnover numbers. In fact, higher turnover numbers than what we have seen in a decade. So but it's not all doom and gloom. Those numbers are just showing a little bit of some softening, but overall, strong financial performance again in this industry with some signs of potential slowdown both in the forecast as well as the staff growth side. So we wanna dive into that a little bit more and see really how is that playing out this year. So one thing that's also worth noting is as I talk about the some of the clarity data, we are reporting on medians. So some of the firms that if you're looking at that and that's not really what you're seeing, know that there's a lot of variation across this, which is also playing into some of the dynamics as we're tracking these results. So there may be, as we're looking at, you know, net revenue growth, for example, the projection. Some print firms are projecting 20% or higher year over year growth, while others are forecasting declines in their revenue compared to the previous year. So these numbers really are just a point of reference and a point of time, but it should help you to think about and to prompt your company to think about how meaningful your firms are tracking and forecasting and monitoring your pipeline, your backlog, your revenue so that you can see where these changes are and and what are the things that you need to do, to manage those. As a little bit of an aside, but key as we look at more of the data in the near term. So just wanted to to give you a little bit of that context. As we look at how firms are forecasting their performance early in 2026, let's take a look at how firms are tracking against some of those projections and really what we're seeing in the industry and if there's some material shifts that are happening. So, Daphne, I wanna start with you. Can you share a little bit about what you see in the Clarity data and how that compares to what you're seeing now from the ACEC research institute's, analysis and surveys and how you're seeing that industry sentiment now that we're nearly nine months. into this year? So I I have to tell you, I was a bit surprised to see the 9.5% forecast. It's it is higher than than what we were projecting. Now keep in mind, our projection is from this time last year. Our, forecast comes out once a year in October. And at that time, last October, we were projecting 2.7%. We're working through the numbers now, and we will have those, next month to release. So I am anxious to see if there is a significant change because, obviously, yours is a more recent, forecast. So So it'll be interesting to see how that, lines up for for engineering specifically. You know, I I think overall, the current sentiment from our, quarterly sentiment studies is strong both for the firm's finances at a plus 79 out of a 100, and, future sentiment is also trending upward, year over year. So it last year, this time, it was at plus 29. It's always much lower than than current sentiment. And the current, look at at twelve months ahead is at a plus 41. So the sentiment about firms finances and even about the industry as a whole is very strong. The US economy, you know, that's a different story we can decide if we wanna talk about. But, that's strong. I would also say backlogs. We're seeing strong and steady backlogs, much, you know, kind of very optimistic signals, that are coming from from, much more optimistic than than what I think you might be seeing in your in your clarity study. You mentioned some softening, and, we are not quite seeing that yet. So I don't know if, again, maybe that'll be something we see in q four. Thank you for that. I mean, I think it's really interesting, right, as we think of the different, again, sizes and types of firms that really play into how some of these metrics look. And and that's where, you know, I always go back to it's really important to be monitoring, looking at these industry statistics, but also seeing how that measures up to what your company is seeing. And is it on purpose? Are you seeing changes you expected? Are you surprised by what's what you're seeing? So, Michelle, what about you? What's your perspective related to some of the Clarity data and what you're seeing in some of the AIA research? And are you seeing some of those changes, as the year is progressing? Yeah. I think we're sort of a mixed bag. Right? When I think about what Daphne is talking about engineers and where you guys look, kind of at both sides of of the partnership between architects and engineers. And so I think that... That's not surprising. So, you know, I... And I think we're a mixed bag. So the architecture billings index, which we do monthly, you know, it's been a flat profession. That was sadly my my word of the year last year, and I think it might end up being... I'll have to think of something equivalent, but my word of this year too. So we're not seeing the tanks. We're not seeing highs. We're seeing things relatively consistent with some, you know, kind of some firms winning and other firms not. Right? So our, so we have a firm survey report we do every two years. So it's sort of our census of the profession, and that's gonna be coming out in a few weeks. And, you know, what that's showing us is overall billings are up 8% over two years. We're seeing profitability, increase six points between the last two years. So I think those are relatively kind of on par. For us, yeah, I would say we're not seeing the big backlog log shift yet. And next quarter... Or next month, we'll have our new... Our updated quarterly backlogs numbers, but, small firms are hurt. They always are. Small and midsize firms, they don't operate on the same, you know, they don't have the same give of backlogs that they can rely on. So, you know, they're much more pressured by the current conditions. And larger firms, yeah, maybe eating up a little bit of that, but we are seeing that as a relatively okay, again, flat, stable metric for firms. So nothing dire in what we're seeing, but, you know, also nothing super exciting. We, started looking at sentiment, sort of inspired a little bit by ACEC. We think about the next quarter looking forward, and so we started that this year. And what's interesting is despite the sort of flatness of billings, there is still kind of conversations going on between clients and architects. And for the first two quarters, we saw those actually over, the threshold, like, showing the positive, perception of what the next quarter would look like, except for the recent number that we just released a week ago, which was, you know, finally edging around that, like, break even. And I really think there's so many break... I think, Daphne, you talked about the economy. We're coming into an election, like, the end of the government budget cycle, tariffs, all this sort of noise of the economy, employment, you know, the Fed just up, you know, increased rates. So I think, you know, all of that would sort of push things down a little bit. But our big firms are still like, there's opportunity. They're still, positive. And firms that have been profitable expect to stay profitable. So, you know, again, for us, this isn't, we're not monolithic. We're a profession of people who feel things very differently based on their Yeah. And I think a lot of this goes back to, you know, in all of these changes and all the things that they're monitoring, it's being able to have data that you can rely on to be able to see what's really happening in your business. Right? So as you're looking at those profitability numbers and you're seeing what's happening in those, is that information that you have, current? Is it accurate? Is it giving your your teams what they need? And and being able to look at that in a way that allows you to see where there might be levers that you can pull. Because as you said, if there's, places in there where, you know, they're they're still expecting to be profitable, in some cases, firms are what we're hearing is they're using that data to then do a little bit of controlling of their own destiny. Meaning, I. might need to pull some levers internally. I might need to make some changes here because I'm seeing where this is going. I don't like that trend. Maybe I'm not able to get to the level I want to, but I'm still able to be profitable. It's just a little less. So we're hearing some firms that are still profitable. They're not quite at the numbers that maybe they were before, but still, you know, really seeing more of that culture of data being a primary for making strategic decisions. And that, I think, in the time that I have been working on a lot of this, is a big shift, right, where it's not just what we've done in the past and how we feel and what we think, but we're really grounding these decisions and this perspective in the industry on what really the data is telling us, in the business, Megan, which I think is really good. was gonna mention to your point about the size differences of how we're bucketing these, these data points, for those that are interested on the institute sentiment study, we do open that up, and you can see how, firms of different sizes and different geographies are responding. So there are differences among firm sizes. What I've shared with you, obviously, is the overall, but, I just wanted to point that out. So for those that are saying, like, oh, I'm a small firm, a large firm, I wanna know specifically that data is in there as well. Yeah. I think for AIA. Right? You're you're doing the same in the in the firm study, and we do that with Clarity for the same reason. Right? Because what may be expected of a large firm is very different than what a small firm is realistically able to achieve. So that's part of the reason we wanted to put those those charts in there for you so you know which bucket you all fit into so that as you're reviewing this data, you're able to really see what that means for you and how that how that plays into what you should be targeting and what's realistic for a company like yours. So, so let's shift a little bit and talk about AI, which is not only an ongoing hot topic, but also one of the fastest changing conversations that is in the A and E industry. You know, if we came together, the three of us, and talked about this at the beginning of the year, you know, we had a little bit of this discussion last year. If we talked about it at the beginning of this year, even three months ago, the the conversation is quickly evolving as we all know. So I wanna talk a little bit about how the conversation has changed. And so if we look at this from a Deltek perspective, we're really seeing that firms are making that change from exploring AI to really starting to define how technology is driving operational value. So they're really looking for firms that are wanting to go beyond just dipping their toe in, but now they're asking the question about what is this gonna what's the payoff? What's the ROI? What is this doing for my company? What should we be measuring? What's the measurable outcome for these pieces? And leaning into it more for intentional decision making, AI driven decisions. And so, Daphne, what are you seeing in terms of AI conversations, especially for engineering firms? What are you really seeing in terms of those those top line themes that are coming. out of, some of your research? we just, released in July a big study on AI risk in engineering, and we wanted to identify not just what the risks were, but how to mitigate those. And so in in that study, what we found is the vast majority of firms are experimenting or piloting. Very, very few, just some of the very largest ones, have reached kinda widespread integration. Right? So they are still kind of dabbling, more so than they were before. And where that integration does exist is really in the back office. So if you think about marketing, HR, finance, proposal writing, those types of things, that's where, I think firms find kind of a safe space to, to start experimenting. And so, we're seeing some some integration happening there, but they're being very cautious. Right? As we want them to be, our engineers are responsible for, you know, the public safety and welfare, and so we wanna make sure that that they are being cautious. They want to understand the risks. They want to figure out how to fully mitigate them, and that's what this study does. It really helps look at a firm wide view of this. Right? This has moved beyond being just a technology IT problem or challenge or or issue to solve for. It really does sit with HR, with finance, with leadership, with, engineers and and project managers. And so that was one of the things that came out of this study was to say, you gotta look at this across your entire organization. Leaders need to be heavily involved in it, and you need to, ask some very different questions depending on what your role is within the firm. But I think the most important thing that came out of that is, you know, there's been all this talk about, oh, is is AI gonna replace engineers? And we feel as though it's not. We feel as though AI is gonna replace engineers who don't know how to use AI, but engineering is always gonna require that judgment. Right? Someone still has to make that final decision. Someone has to stamp the plans. And so technology may be changing how engineering work is getting done, but it is not going to transfer that responsibility that the engineer has to, you know, to stamp that work and make sure that it that it's ready to go. So, really interesting study. It breaks down, as I said, across all the different, parts of a firm and, and ask some some tough questions for leaders across those different divisions. Yeah. And I think, you know, if you think about that, Daphne, right, if you think back to all the big technology changes that have happened over time, there's always that fear that it's going to take away the role of the architect you know, to your. point, we we need them. There's still that, you know, human in the loop element you hear a lot about with AI, and it's so critically important, especially when it comes to engineering and architecture. And I agree. I don't think that's something that we're gonna see going away anytime soon, but it's how you use it in a meaningful way. Right? If you think back to moving from CAD manual CAD to using software. Right? Like, it it changed what we needed in terms of the skill set, but it didn't move away from the fact that we still need drawings. We still need them, you know, created in the same way. They're just not done by hand. And so how does this evolve and take away some of the challenges that our teams have been facing for a long time so that they can focus on the places where their expertise and their knowledge is so critically important the opportunity design process. innovation. So? Do you know if if you've got time savings. and you can really focus on the innovation side of things? Yes. And I you know, I always I always say too, like, it allows engineers and architects to really focus on why they became. engineers and architects in the first place. Right? They can actually spend their time on the creative. problem solving rather than spending time on things that are more mundane than and, you know, manual and and taking some of those processes out of the way. So, so with that, Michelle, what about you? What are you seeing in terms of AI and how that's impacting architectural firms? We look really different... Or sorry. We actually look really similar, to engineers when it comes to this particular, issue as opposed to, like, some of the business stuff that can can vary. We also have a new study. It is not out yet either. I feel like I have a lot of stuff coming out. So, if you watch this, you're getting some data that hasn't been released yet but will be. We did a member survey of AI. So that will balance against... We also have collected some firm specific data about what's happening in firms, and that will kind of follow that report, so in about three, four weeks. But we are seeing kinda the same thing. Right? The shift to, you know, in that study, architects are still edging in, but they at least report basic knowledge. Right? So about 42% said basic knowledge, 37 said I have a practical knowledge, and 16% put themselves in that advanced or I'm an authority on AI categories. And about three quarters of them are using it on something from a project perspective, and that's different from how they're actually using it pro... Commonly, which to Daphne's point isn't really on the business stuff. It's like helping them with RFPs, helping them report things, doing some re... Like, finding some new products and things like that. And so we're giving a lot of advice to product manufacturers to, like, you know, have things searchable and able to be found. But, yeah, I mean, I think there's there's always, anytime there's some new disruption, things change. But I always, think we got ways to come on AI even though it's moving so rapidly. You know, it only thinks back. It's only as creative as what's been put into it, not what is to come. And I think that architects are... That are sitting with it are understanding its power. It will change things, perhaps opens up a lot of new... Potentially some new value added areas for architects where they can move away from time consuming, repetitive, annoying tasks, and move into things that are, to your point, why they were interested in the discipline to begin with. I would say the the the firms are moving in this direction too. Right? 63% of large firms, so very large firms. So for for us, that's over two fifty, have a formal strategy in place now. They have staff. They're offering training. The problem is the rest of the profession isn't, but most architectural professionals work at those larger firms. So definitely experimenting with that, using it on some of those projects. But training is really critical. And right now, that is a little kinda all over the place. And so that's where we're really recommending firms find those places where they can offer some of that formal training, not sort of ad hoc or when someone requests it and they say, sure. You can go take a course somewhere. Right? So I think that's really an important opportunity. But we're kinda facing the same things. Like, what's the risk? What's the opportunity? If I wanna put all my projects in and do some really interesting research and data analysis, how is that protected? I don't want it to hit an LLM. So, like, figuring out how to use those tools in really powerful ways within your firm as opposed to, you know, we we were kind of... Like, how much you put out into the, you know, the the the the large language models. Right? Yeah. And I think there's a couple of things that, you know, I would say in in response to some of those things. So it's interesting the number of comp the number of people who have said that they're in that authority, which is challenging. Right? Because it's changing constantly. So it's hard to be an authority on something that changes literally every day. I have a colleague who has shared that, you know, they follow a news feed that shows different AI changes and, like, the number of changes every day, the number of new tools and platforms and thing. Like, it's just changing so fast that it's hard to feel like you can be an authority on that and be able to just minimally stay up to date with what's happening, which just makes this so hard for for companies to feel like they've got a handle on it. And I think the other piece in that is that as you're trying to make that time, as you're talking about and making that time for training, you know, there there has to be the appetite within the company to be able to have that time set aside too. Right? It's taking away from. project deliverables. It's taking away. from utilization. And as we're looking at margins tightening and profitability, like, how does that play in? And and seeing that really as that investment that's needed in the business and and making that a priority so that your team feels like, yes. It's okay for me to be able to spend my time doing this thing when I know that it's taking away from my billable work that that I need to be able to do. And I you know, the other piece that you talked about too in that training is being able to have not just going out and taking some course. And I think that's one of the challenges in both architecture and engineering is to be able to see examples that are relevant, being able to see ways that you can use it that are meaningful within this space. Right? So even in my role in marketing, like, I'm always looking for examples of how it can help me. And I'll ask, you know, give me some examples. Give me and it's marketing, but it's not what I do, and it's not relevant to what I do. So, you know, I could do the same as a proposal writer or in my business development or marketing role. But if they're not things that are relevant, it's hard to be able to to take that and apply it and say, yeah. That's that's perfect. Let me do that. And I think some of that knowledge sharing, it we're still in our infancy stages of some of that as an industry of being able to share some of those best practices and having training courses that are designed for architects or engineers that really dive into how do you use this in your day to day to to make your life easier and better and faster and more efficient and all those great and wonderful things that it can do. So, one of the other areas that I think both of you touched on was in terms of where you're seeing this leverage the most in the business. And just to comment on that from a Deltek perspective, it's interesting that we ask the areas that you're using AI the most. And very similar to, Daphne, what you were talking about, we're seeing a lot of it in the marketing side. So kudos to the marketers that are really leading the way and leading the charge in doing this. I know they create a lot of content, and, you know, it makes it easier for maybe easier for them to dive into this a little bit more. But, there's a lot of conversations I know that are happening in the AEC industry when it comes to marketers and business developers. So keep that going. Keep leading that. Share that with your teams internally. Give them some ideas, so that, you know, we all can can can the the rising tide raises all ships. Right? So being able to all see it together and and move it in a positive direction. So, so let's switch a little bit and talk about business development and project delivery and what we're seeing in terms of changes there, how things are a little bit more under pressure. You know, we're hearing that things are, tightening, margins are tightening even though firms are profitable. So, we want to look at what firms are seeing really in terms of trends for business development, for pipeline, for project delivery. And when we look at this from a clarity perspective, one of the things that we're seeing is that proposal volume increased quite a bit in the past year. So not in 2026, but looking back at 2025, we saw an increase of 32% more proposals that firms were submitting compared to the prior year, which is really interesting to really see how firms do this year. Some of that, as I've talked to companies and talked to individuals, can be based on, you know, can we is the expectation that we can submit on more because we have AI tools, because we have these resources? Are we still making the right decisions, though, on which ones we should go after? Are we now just saying, like, oh, we now we've got all these resources. Let's just go after everything, which is, you know, taking a step back fifteen years and taking me back to my proposal days. But as I mentioned before, you know, it it's it's really thinking in terms of how firms are looking at their pipeline, looking at that backlog, seeing a little bit of a little less optimism, little bit of the backlogs down at least from the Delta clarity perspective and a little bit different on on what you all are seeing. And we're also seeing again that firms are really being pressured more on profitability and margins. And financial leaders, actually, one of the things that we saw is that one of their top initiatives going into the coming year, the coming three years, is to better educate project managers on financial metrics. So helping them to be more responsible, helping them to be more accountable, not just for the schedule and not just for the design deliverable, but for the financial performance of those projects, which can really, you know, change the game of how those project managers are trained, how they're looking at projects, how they manage those projects overall. So, so, Michelle, I wanna hear from you a little bit on this one in terms of what you're seeing on business development, project delivery, and really what some of those trends are for the architectural firms. Yeah. I'll start with the point about competition, and business development. So we don't track how many proposals someone does, but we do track, like, how much of their business is repeat clients versus new clients. And, you know, I would say this is also one where it's a little bit of a mixed bag, right? So, and there's some recent conditions that have made those things change. So we're a relationship business, right? A ton of architect work is repeat clients, especially in the institutional space. But some of those sectors are weakening and some are are solid. Right? So healthcare has been pretty solid. And so that stayed pretty similar. But these public projects that are sort of... Even if you use the same firms, it still opens up, forbid. And so I think that when things are a little softer, some firms that have the ability to kinda move into those sectors maybe have been preparing. So there's a little bit more competition just because it has to be sort of publicly posted. When it comes to some of the federal government guidelines, the recent redefinition of a small business means that more architecture firms that we count as midsize would now qualify for those small business incentives. So while that's great for that portion or a larger portion of architecture firms, it will make it tougher for some of those little guys where that really was, a benefit that that they saw that helps them a little bit competitively. So I think those are... You know, and residential has always been something where, like, you know, you can only work with a homeowner so much. Right? So they're always kinda chasing business. And so in some ways, a... The AI piece you've been talking about can make that a little bit easier as you can, like, look at markets and track them a little bit smarter. You can use AI to scrape newspapers or look at, like, you know, events you might go to to help, you know, find people who are wealthy and would hire an architect to do something to their home or need a new home. So, you know, those, stock market is kind of a more of an indicator for that group. So, rich people are doing okay, right, economically. So, like, there's some movement in the single family space that looks quite different from, I think, the rest of our, of architecture firm business. I I think on the project delivery side, this is where it would be interesting to see how AI changes. Right? We've heard of the promise of an integrated project delivery or an IPD. We've seen some of the contracting change, but not too much. But I do think how we think of risk and, and the allocation of that risk may mean we see some of these delivery... Alternative delivery systems finally kind of take off in a way that they haven't, at least contractually, even if the behavior between the parties has become more integrated over time. So, yeah, I think this is where delivery projects will be very interesting to see how kind of this movement of intelligence, and speed of access to that information may may make how people think about risk quite different. And I think it also puts more pressure then on the project management team. Right? The project manager themselves, Yeah. what do they need to know, how many different project types do they need to be familiar with and capable of managing and being able to do all of those potentially at the same time. And so as you look at that skill set for what do you need as a project manager, it's constantly changing. Right? And it's, again, not skills that are necessarily part of your undergrad degree. You don't come out knowing what the differences are between design build, design bid build, and how you would actually run. I mean, you may be familiar with them, but nobody's teaching you how to run an IPD project from a design perspective as a project manager. So there's some of those dynamics that you know, how do you make sure that your project managers are keeping up with all these changes? How does that change the dynamic for them and the expectations on them so that they can focus on the areas that that really matter? So, so, Daphne, are you seeing some similarities, differences from an engineering know, perspective? there's so much in everything Michelle just said. I feel like I have a 100 comments. But I'll I'll start off with, you know, the the original question around, business development and pursuits and so forth. And so we don't formally track, track those statistics specifically. But I did reach out in in anticipation of this question to our business development and marketing forum and just to kinda see, like, you know, what are they talking about and what are they seeing. And they definitely, you know, feel there's a clear return to pre COVID proposal environment. Firms are submitting significantly more proposals than than they have before and than they expected to. And I think a lot of that to the earlier point, right, is driven by AI. They've got the ability to submit more proposals for the same budget, essentially. I think the the consensus also was that as the economy slows, firms are pursuing more opportunities, trying to see what sticks. They wanna maintain that backlog, which is really strong right now. Right? They've got twelve months worth of backlog. They wanna maintain that. And I think that, you know, kind of aligns with with the steady findings that you said about this increased volume of proposals. Now whether the win rates are there or not, then, you know, that's that's another conversation. We also are hearing that firms are participating more as subs with larger teams. So, again, that increased, competition and overall proposal activity as a result of that. Right? It's not just their normal clients, but also the the larger engineering firms that, that they are, teaming with as well. I also think about, you know, the the discussion around AI and and the, types of delivery methods that we're using. We're doing a lot of research in this area around progressive design build. IPD is probably next on our list. We're also in the middle right now of big study looking at connected data. And so this you know, all of these things, right, are connected together when you think about it. And, so looking at data from, you know, coming from Michelle's group as the architects through the engineering, through construction, and then even the life cycle of these assets that we're building, right, and how we're managing those and how we're planning for maintenance of those and all of those things. So a big study that we're working on on, like, true connected data, what does that look like and what impact is that gonna have on firms? Are engineering firms gonna have new lines of business? I think Michelle talked about, you know, potential new lines of business that AI is opening up, and we're seeing some of that as well. So stay tuned. More to come on that, next month, but it's it's really fascinating how all of these things are just I feel like one study just dots to the next study to the next study. Right. They just. they lead to the. next one. Right? They just start writing themselves. And I think it's, you know, it's interesting too as you think about the business development and some of what you shared because what we have seen is one of the top priorities for business developers is being able to work on those strategic networking relationships. And that's a huge priority because the future is so unknown because of the economy, because of all the different dynamics, because of the different types of markets that are doing well and how that seems to be fluctuating quite a bit. So firms are looking for who should we be partnering with, why should we be partnering with them, where are their opportunities, how do we step in different ways, and which is, you know, again, from that proposal person in me is creating a lot more of those subtype proposal opportunities, but a lot more to be submitted on as well for for those companies. And the other thing is I know you said, you know, we don't look too much at the win rate. And I think for many firms, the win rate itself, again, is only part of the story. So being able to look at your data and have the data to dive into, to be able to see, are there trends that are that you're seeing with particular teaming partners, with particular industries, with particular clients, with particular project managers that maybe are leading the proposal, that maybe you don't have the same success rate. So really being able to take that information and dive into it to find those trends so that you can put your best foot forward and put the right plan together. You know, maybe it's not this project manager for this particular company, but they do really well with this client and, you know, they really like to work with them. So how do you build the right teams and the strategy, and and what can you find again in that data so that you have a better opportunity to succeed? It's not all gonna be spelled out. As I always say, business development is much more art than science. And so how do you how do you build out those strategies to just try to find the right the right place for that? So, so let's shift a little bit. We've talked about the pipeline. We've talked about project delivery. We've talked about margins and how those are getting squeezed in some areas, how AI is really impacting firms and how firms have been performing. So now we wanna look at what firms really should do with all of this information to help them better plan for 2027 and beyond 2027. From my perspective, this is giving firms the opportunity to have a more disciplined business execution plan and a strategy in many areas of the business. So this doesn't just have to be a financial conversation anymore. It's not just about what's the revenue target and how do we get there, but a more holistic view of the business and bringing all those different teams together to put that put the right strategy in place. So how firms are proposing on in pricing projects, how this impacts your staffing plans, your growth plans, your, what your your targets are, the types of people that you need to hire, what this looks like going into 2027, where there needs to be tech investment. And, you know, Daphne talked about there's an IT budget, but now things are changing and many companies have a separate AI budget. They have a you know, what does that technology budget look like going forward, and what it what really is going to be the best place for impact so that you can have the greatest the best place for your investment so that you have the greatest impact on the areas of the business. So as an industry, we often approach data very retrospectively. The industry is moving into much more of a data centric, strategic mindset, which is a great thing to see, that we're using that data for planning, for looking forward, and not just looking at what happened in the past. We've actually had a conversation. I did a session recently where looking at the balance of leading and lagging indicators and and really needing both of them and not just focusing on, looking in the rearview mirror. So, so when you think about all of these things, all of this data really has to be one of the many inputs into how we want to move forward in 2027 so that you can be intentional in your planning and not just look at what you did last year and say, oh, well, that was great. Let's just add a little bit percentage more and hope for the best. Right? So, so, Michelle, as you think about this, what would you say to firm leaders about what they should be doing with all of this information to help them in 2027 and beyond? I mean, I think you hit on so many points. I mean, the number one thing that we try to do, when we talk about our information is that what are the data points you should be measuring, why do you measure them, and how do you use them in aggregate for each other. Right? So no indicator is good on its own. It's always a set of things. And in us telling you what is does not mean it equates to your business. So the assessment is always what's super critical. Right? Like, we put out... Here's what billings are. Well, what are your billings look? Like, don't just take that. Like, measure it. What is your billings look like? And if you're doing well, even though kind of the market isn't, like, you know, shore up your clients, look for that, protect your backlog. Like, you have the opportunity to maybe explore some sectors and see where things are going, right, with some of those leading indicators. If you're lagging that metric, you know, like, double down on proposals, shore up your expenses. Right? There's different things you would do as a business. Definitely look at win win rate. Definitely look at forecast. So I think it's a little bit for us, like, teaching how you look at those things in aggregate and trying to make that make sense for people so they can dig in and make better decisions. And I. think just real quick, point... Michelle, just to add to that, I think the other piece of that is just because there's other firms that their numbers look better doesn't necessarily mean that that's the case for your firm because there might be a really strategic reason why, like investing in training. for AI that might impact your utilization, but it's the long game that you're looking at. So not all these numbers we need to look at in the short term, but some of them have long term impacts that have to be a part of that that strategy and that discussion Yeah. And profitability isn't the only metric. I mean, too. to your. point, it really depends on what your firm... I mean, maybe it is. Right? Like, I mean, if you want to not be, not possible. but it's not the only thing. Right? Right? And it really does depend on what your... And and so what your business is. And I think the one other thing I'll point out because I think this connects to earlier is the lack of intentionality. Right? So the m and a activity has been really hot in architecture firms over the last two years. You've probably seen a lot of news stories. Even big firms are buying other big firms or acquiring them. And so we're seeing a lot of that. So there was some sub work a lot more during the pandemic, but we're actually seeing some of those firms get gobbled up. So big firms are becoming even bigger, and we are an uneven profession. So most people are employed at large firms, but most businesses are small. And so, you know, we're still in that place. But the... One of the things we're seeing, maybe not in some of these big firms buying big firms, but big firms buying little firms and little firms looking for opportunities, is because they don't have intentional leadership transition plans. And so as you're getting an aging, particularly on the small firm side, you have a lot of... That's where a lot of the aging, part of the profession is, and the market's actually pretty good. So if you have a four zero one k, like, this is not a bad time to retire in in the... That sense. But if you haven't been, like, nurturing that next generation, if you haven't been... If you don't have that intentional plan, like, selling it is is one option. Right? And that's okay if it's intentional. And I think that's where we wanna help people see that ownership transition plans are super critical because it's about what is right for your business. And maybe just divesting it to another organization is the right thing, but maybe it's also just fostering with... Within... Like, hiring in that... With that intention and building teams within that intention of of growth and passing it on. In terms of leading metric, we always say look at single family housing. So even though architects don't work in the mass single family housing, that is the leading indicator. So, single family housing and then, because when that comes about a year later, you'll start to see schools. About a year later, you start to see hospitals. About a month later, you'll see, right dot dot dot. And so we always tell people that. That's, like, a quick shot. And then architects. So if you're a contractor watching this, like, look at architects because we are a leading indicator to construction spending by about thirteen months, so eleven to thirteen months. So that billings index is gonna kinda give you an indicator of where the forecast is going, and then we do a a consensus construction forecast that comes out twice a year, that looks at that construction spending... Those construction spending numbers from the leading construction economist. So, that's kind of my... When you're looking at the, you know, sort of how you track the cycle, of leading to lagging, that sort of... That... That's the advice we give. Awesome. Daphne, what about you? What would you say to firm leaders as they're looking towards 2027 know, I beyond? I love all the the metrics that Michelle gave and, certainly all good things to be looking at and thinking about. And I know our engineering firm leaders, they are, data geeks, and so they love looking at all that stuff as well. But I'm gonna take a little bit different tack. I think, you know, my focus has been a lot on things that that revolve around AI right now. I've I mentioned the AI risk study we released In May, we released a study that looks at the intersection of AI and, and talent and the changes that are happening within firms. How you know, what is your business model gonna look like as AI increases within your firm? We are really, thinking about data as the new gold for engineers and thinking about, as Michelle talked about, new lines of business that, engineering firms may be looking at, Yeah. right, as they, think about all that data they have. And so I think my focus is really on, from an AI specific perspective. Designate someone, especially, you know, the smaller firms, whether it's Michelle's 10 small or my 50 small or whatever small means to you. Designate someone who's gonna lead on AI. You've gotta have an AI champion. It doesn't necessarily mean it's the tech person. A lot of the big firms are hiring now, you know, chief AI officers. I don't know what that acronym is gonna be, but I'm sure they'll tell us soon. But I think you've gotta have someone who's leading. You've gotta create a firm wide team to work on on AI, especially the the risk mitigation piece, which can be significant. So there's gotta be some some focus there, ensuring that you've got policies in place and but that you're allowing for experimentation. Right? You've got to kind of find that balance between experimentation and risk. We're hearing a lot of folks talk about citizen developers. So folks within their firms are not on the IT side, but have, you know, a great interest in what's going on with AI. And so they're they're working with it. They're playing with it. They're experimenting. But you really gotta make sure your staff is educated to understand what your policies are. Make sure you have policies in place, which, you know, six months ago, we were stressing that. Right? Like, get some policies in place. I think we're we're making headway on that. But, so, yeah, have policies and then just make sure that you're sharing the learnings. Right? So whether you've got one person kinda spearheading this or you've got a a, you know, a a skunk group that's that's working on stuff, just make sure that you're sharing those learnings so that you can continue to leverage AI, across the firm. I just wanna double down on this is not necessarily your IT. people. And in fact, where this is gonna move for an architecture firm to be very successful, it is not your IT people. And that's where we're seeing innovative firms are bringing people in that are... It... That's a very different purpose in a firm, and that is still important. And you need training in that, and AI will affect that. But it is very different when it comes to the business of what an architect. does and the opportunity and the profession. Yeah. So I just wanted to underscore that point that you made, Daphne. Yep. I think that's great. And I think, you know, the other thing that, as you mentioned, the data piece of this, you know, AI is going to be so reliant on data, and so it's also an opportunity to have firms focus on that data cleanliness. You know? Do you have the data that's reliable? Is it updated? Is it accurate? So that when AI is using your data and you feel like it's not giving you accurate answers, it's probably because your data is not clean. So it's also a good chance to have some conversations about, you know, what you have and and what's being, used as the the source for all of that. I also was in a conversation last week and had, somebody that mentioned if you're trying to figure out where to start with some of your AI projects and, you know, where do you really dive in and where's their opportunity, to ask your teams, what would you pay to never have to do again? And that's a great place to think about where AI may be able to step in because that really gets to the heart of pain points, right, and and may uncover some opportunities that may not be AI. It may just be some automation. It may be some different workflows. But if you ask your teams questions like that, you really be surprised at some of the things that, that may get uncovered that point, in, that. So did that internally here with our. ACEC staff at National Headquarters, and we were amazed at the things that within the week we were able to automate just because someone said, you know, I really hate doing this every week. And, you know, our I IT guy said, oh, here. Done. So that is a great question. I love that. Yeah. And it's also a great opportunity to find where there's gaps in knowledge. So in some cases, we've done that, right, where you ask that question and somebody's like, I am struggling with this thing and you're like, oh my gosh. How did you not know that we have x, y, and z that already. does that for you? Right? So it's a great opportunity to reeducate or just to help people see what might already be there that maybe you need to just roll back out again or remind people of. But agreed. Some of these, they're not monumental projects that we need to take on for months at a time. Some of them are really small fixes that can really have a huge impact on people's just overall stress level and their confidence level and, you know, just being able to solve those little problems, can can really be, a big difference. So there is one question that I want to dive into here for both of you because I think it's definitely something that comes to mind a lot when it comes to AI. And that is that, you know, I'm seeing a push to get rid of people by replacing them with AI. What are you seeing? So curious if either of you have some perspective on that. I mean, I'd... I I don't... I think with everything, there's always some jobs. Oh, I'm sorry. Daphne, Okay. here you go. I'm a little froggy. Yeah. I think clear that. the from a couple of studies that we are either working on or have just recently put out, we are not seeing that. We are seeing, as I mentioned, I think earlier, engineers will be replaced engineers who don't know how to use AI will be replaced with engineers who do know know how to use AI. There will be efficiencies. gained. There will be innovation that will happen as a result of freeing up engineers from doing those mundane things you're you're mentioning, Megan. But we don't see, you know, kind of, you know, the AI robots coming in and taking over our industry. There's just too much human judgment that has to happen in that process. That is still, you know, I think that's still key. That's kind of the moat around our industry, if you will. Yeah. So now that I'm not as froggy, I will double down on that. I think we finally... You know, there's a lot of fear. There always is. We're risk averse. I think they're finally settling into... Okay. Like, we're not going away. But like with everything, some jobs do go away and some jobs get added. And that... What I like about it, I think there's some excitement about, can you bring in other disciplines to architecture firms? So you're not just reliant on architecture school graduates to be the only audience that can bring value to the firms. and I think that opens up kind of a lot of excitement in areas as well. So, yeah, I don't think this is a going away and I think people finally kind of realize that. And any neuroscience shows you that there's kind of a really interesting brain in an architect, right? They... Some people edge towards the art, some people edge towards the data, and the ability to kind of back map those two is something that AI does not do well. And so I think that... And the risk is so important, and I think Daphne. made that. That the responsibility to health, safety, and welfare is so critical, and the... You get it wrong, the implications are really dire. So I think that's where you still... I mean, the best of both worlds is is you have a person judgment with the tools and the expertise and things at your hand that you can never do, you know, that. you couldn't do on your own. And I think, you know, we have seen at least I've been in some discussions on some of the marketing and business development of, like, you know, is that a place where firms are looking to use AI as an opportunity to potentially reduce overhead and do some of those things? And I think in. some of those cases, it's being able to have conversations about how to do how to use these in a meaningful way. And some of that may be shortsighted, and I think some of that, to your point, Michelle, may be a temporary, like, as we see how this evolves, that maybe that particular position or the way that that's structured changes. If there are positions that are just being eliminated, like, we can just, you know, we can push through 35% more proposals with five less people. That's probably shortsighted, and at some point, that's gonna come back. And it's not gonna potentially be as successful. But I think with any new technology, there's always that, like, here's what we think is gonna come forward, and and it may not come to fruition. And so some of those positions that might be eliminated now may come back, or maybe those are leaders that some people may not want to be working for. So, you know, those things change too as. the as the industry evolves. So, as we wrap up, I know we only have a couple of minutes. There's one question that I wanna have both of you, share, and we've gotten several questions about where people can find this amazing research for for you. So from a Deltek Clarity perspective, you can go into the documents within here. There's the q and a and then there's docs. You can download the Clarity report there. You can go to deltek.com and find all the great Clarity data. Michelle, would love to hear from you on where people can find all of the great research that's going to be coming in October because there's a lot that's coming and how people can get access to that. Yeah. So ai.org, you can always search somehow through that. Ai.org/abi has our architecture billings index. Aia.org/firmsurvey. We'll have the updated firm survey when it releases in a few weeks. And we don't have a, like, a short URL yet for the AI survey, but if you go to .org, you'll be able to find that, and we'll obviously do some social and some push push outs when that one is launched. And our construction forecast is ai.org/ccf. So you can get that tool as well. So those. are some shortcuts. And, Daphne, what about all of the great research. Thanks, institute. content? I'm looking forward to seeing your report in October. The acecresearchinstitute.org, if you click on research at the top, it will take you to all the research that we have available. You can download and, we typically do one or two webinars related to each of the releases, so you can see those. They're all recorded and available there as well. And in October, we will have three new, reports coming out. So be sure to check back, at the end of October after the ACEC fall conference. Great. Thank you so much. And for those that as you're thinking about this data, you're thinking about how you can leverage this, if there's ways that we can help at Deltek, we'd love to be able to do that to make sure that whether you're using a Deltek solution today or you're looking for one to make sure that you are setting that up in a purposeful way to help you as an architecture and engineering firm to be able to track your metrics, track your data, leverage AI tools right within those solutions so that, you can really manage your pipeline, deliver your project successfully, streamline that cash flow, all the great and wonderful things that, that we want to be able to help you with. So if there's any questions that you have about that, we'd love to be able to have the conversation with you. And you also if you come up with questions after this that you didn't think of and you want to reach out, please feel free to reach out to me directly. My email address is here on the screen. Would love to hear from you whether that is, something that you got out of this today that you just wanna share or questions that you have. I'm here to help you. So, please reach out with any of those questions. Thank you. Thank you. Thank you both for this. It's always great to have these conversations with both of you and to be able to share your insight, hear from you, and, I really appreciate you both being here today. for Yeah. Absolutely. Thanks, Megan. Thanks, Daphne. And thank you all for joining. Appreciate you sticking with us for a couple extra minutes, and we hope that you all have us. a fantastic care. day.