The latest Deltek Clarity A&E Industry Report found a small number of architectural and engineering projects are on track and technology adoption was low. We caught up with product director, Megan Miller about the report and how the past 12 months has impacted businesses in our sector.
Why is the Deltek Clarity research crucial in helping architectural and engineering firms deliver better project outcomes?
This is our second year running the Clarity Report. It gives us insights into benchmarks, trends and initiatives specific to the architectural and engineering industries.
Companies can compare their business with other similar firms. If you only look at what's happening within your firm, it's difficult to determine your goals with any clarity and whether you are using the right measuring stick.
The Deltek Clarity Report can help challenge your business and be a catalyst for conversation within the company. Companies will derive enormous benefit from figuring out where barriers to growth exist, where the business is today, and how they compare to similar firms. That can help the development of a feasible growth target and then ultimately how they get there.
Without benchmarks, businesses can't start to take steps in the right direction.
What surprised you in the findings?
This year we saw a surprisingly low number of projects on track, both from a budget and scheduling perspective. Architectural and engineering (A&E) companies reported that only a third of their projects were on track. Covid-19 may have caused part of that, but companies should take a closer look at what's happening with projects that are not meeting their targets.
It was also surprising to see the gap between how companies rate the importance of embracing new technology and the actual adoption of those technologies. Two-thirds of firms see emerging technology trends as essential to their business future, but only one third are deploying them today. It suggests that most A&E businesses still rely heavily on manual data entry but also shows positive signs for embracing these technologies more broadly in coming years.
Are Asia-Pacific business leaders placing too much confidence in outdated processes?
The findings showed 44% of Asia-Pacific (APAC) firms have high or very high confidence in their firm's ability to report on budget; 51% say the same about the schedule. However, just 33% have half or more projects on or under budget, while just 27% have half or more projects ahead of schedule.
I don't think all companies have a clearly defined process or the tools to know exactly how their projects are progressing.
Participants are asked what percentage of their projects are on or under budget, and I always follow that with a question about how confident they are in the accuracy of their answer.
The data shows about a third of firms are on or under budget, but there is a question mark whether they have the data to back that up or are relying on project managers for the information.
While it's great to see business leaders displaying confidence in their project managers, there may be a disconnect between what they are told about project performance and the actual project status.
Digital technology can help managers access the right level of detail to facilitate a meaningful conversation with project managers about project performance.
How did COVID affect architectural and engineering firms?
During the global pandemic, firms had to adapt quickly, and the results of the report suggest most did well across the board.
The report shows that 27 per cent of projects were delayed, and 22 per cent were cancelled. However, 20 per cent of projects were accelerated during the pandemic, leaving 30 per cent that was able to stay the course. Those who continued uninterrupted were likely to be longer-term projects where the clients wanted to progress the design phase.
How did architectural and engineering firms adjust to the demands of the pandemic?
Firms had to pivot quickly to figure out how to run their businesses remotely and coordinate project teams and deliverables to effectively communicate with clients who weren't in the places they would typically find them.
According to the report, firms successfully coordinated with clients, managed project information and managed cash flow electronically to keep projects and the business on track but struggled with remote project delivery and managing dispersed teams.
Firms have learned a great deal in the last year and are now looking for opportunities to improve their business processes. That includes managing projects and leveraging technology to better control areas where they struggled before the pandemic struck.
18% of firms say they are digitally mature today. How has that changed over the last 12 months?
We saw the number of companies that consider themselves either digitally mature or advanced in the use of technology double compared with last year's Deltek Clarity Report. However, that number is still less than one in five firms.
Seventy per cent of firms now expect to reach advanced digital maturity in just five years which is an excellent sign for the industry. The challenge for those firms is to continue to make progress toward digital transformation to ensure that, in five years, we're not saying that we think it will happen in the next five years.
How important is it for firms to accelerate their digital transformation?
Digital transformation is going to be critical if a business is to stay competitive. Firms that operate with a disconnect between the business and their digital strategy will be disadvantaged as more clients look for companies that can deliver projects digitally.
It is also becoming critical that firms retain existing talent. Workers who have to undertake manual processes in their day to day roles may begin looking for a position with another firm where technology eliminates those headaches.
One example of how technology can make life easier is with project managers who still have to go to the front desk or contact accounting to obtain a new project number. That's not something that can happen when everybody is working remotely. It's an outdated process and something that's easily solved using digital technology.
How should businesses approach their digital transformation over the next 12 months?
We often hear that a digital transformation is such a daunting task, and firms think an elaborate and well-developed strategy is required before starting. However, it can come down to just re-imagining the business in a digital age to identify simple ways to leverage technology and make a better workplace.
One of the key themes from the report this year is business process automation and improvement.
The best way to approach digital transformation is to look at it as a journey. There is no clear start or end, so approach the project incrementally. You won't suddenly reach a point where you can announce to the world that you're digitally transformed.
Progress comes in many forms, and you will have to celebrate and share your successes along the journey.
Start by identifying a couple of different areas that would benefit from transformation. Think about the tools that you're already using but maybe not fully leveraging, like electronic invoicing. Many firms already have this in their system but don't have it turned on.
Also, look to the people in your business to help move these initiatives and technology forward. Develop a team of people who can look for opportunities in automation and process improvement.
Another tip is to ask people about the inefficiencies they see in your business. You are likely to get feedback quickly on the things that people get frustrated with, and there could be some quick wins amongst the ideas. Others will take a little more time to implement, but they're all worth the effort if you can take away some of the pain for your teams.
Finally, there's a massive opportunity on the data side of your business. There is so much data available, but most companies are barely using it. Combining the latest technology with the data you already have will lead to better decision making and ultimately provide more significant opportunities for further digital transformation.
Leveraging new technology in the right way will show people that digital transformation isn't scary; it's just a new way of working.