Best time to be in AEC

Dec 12, 2021

Chad Clinehens

Optimism among AEC firms is high as we look ahead to 2022 and beyond.

As we wrap up our ElevateAEC conference season, one thing really stood out: We are operating in a historic climate in the AEC industry. With industry performance metrics breaking records, we continue to defy expectations. Our in-person ElevateAEC conference in Denver provided an environment where you could feel the buzz around beating those expectations. The elements of networking, learning, and celebration were charged with an energy many had been saving for two years. But beyond the excitement of the return to the red carpet, there was so much more to feel good about. We serve in a great and stable industry, one rich with purpose and sizzling performance. To put a cherry on top of the event, the House approved the infrastructure bill late on the last day of the event, further fueling optimism for 2022 and beyond. Here are some Zweig Group data takeaways from this year’s ElevateAEC conference:

  • The industry is hot. Last year, we started by presenting a key industry metric that shattered previous records. In 2021, we’ve broken that record again, posting the best industry performance since data has been collected. That metric, which is a critical measure of industry performance, is profit. Industry-wide median profit is now at 15.6 percent from our most recent Financial Performance Report. For much of the industry, revenues remained strong with increasing backlog, but a drop in general and administrative overhead also helped push profit into the stratosphere.
  • The recruiting and retention problem grows. The past year does not paint an improving picture of the industry’s top challenge. In fact, things have taken a turn for the worse. Staff growth took a nosedive during the pandemic, even turning negative in 2021, from nearly 10 percent growth pre-pandemic down to -1.7 percent at the beginning of this year. This is why some in the industry are describing this phase as “the great resignation.” Although the financial metrics look good, the other side of the equation raises the alarm for the current and future state of employee burnout, mental health, quality, and a whole host of other side effects of an industry hotter than ever, but struggling to maintain a workforce.
  • Backlog is strong. There is no relief in sight. Backlog in the industry – work that is under contract, not yet performed – took the sharpest climb in a decade, going from 7.7 months in 2020 to 9.3 months in 2021. Good news for many, but also another indicator we’ve got a lot of work to do and must have the people to do it, without burning them out.
  • Growth matters. For those unsure how to sell a growth plan in their firm when they are busy, these two metrics make a strong case. Voluntary turnover is more than three times higher in average performing firms compared to fast growth firms. Fast growth firms, defined as firms that have grown 20 percent or more per year for the past three years, are better at retaining people and also better at recruiting as the days to fill a job is significantly lower in fast growth firms (30 days versus 43 days respectively). People want growth because growth provides opportunity and solves problems. So when trying to sell “why grow” to the overworked project manager, make sure they know that growth doesn’t mean they have to sell more and do more, it means they get to keep people and find new people, which helps with the workload issues. Change the conversation and arm people with real data and the right message that drives performance.

Looking ahead. We have much to be optimistic about as we head into 2022. We live in a time where community spaces and experiences are important to everyone. Investment in infrastructure will fuel design and construction. We are getting better at running our businesses and producing financial metrics that continue to elevate our idea of what is possible in this industry.

  • ElevateHER 2022. Jamie Claire Kiser kicked off the 2022 ElevateHER program on our final day in Denver. In 2020 and 2021, cohort members worked in smaller project groups on self-chosen focused topics, creating a deliverable to be shared with the rest of the industry. Project topics ran the gamut including methods to support individuals in the industry at all stages and phases of their life, addressing conflict and implicit biases, designing career paths, awarding and incentivizing diverse projects and firms, and much more. The focus of the 2022 cohort will be to continue furthering the existing projects, and on implementation and advancement of the ideas initiated by the last two cohorts. 2022 cohort members will meet in-person at the program kickoff in Spring 2022, and will receive resources such as presentation coaching, training, Zweig Group research, networking opportunities, and more, and will present to the first-ever in-person ElevateHER Symposium in Las Vegas on September 14, 2022. Applications for the 2022 cohort are due by December 17, 2021. Click here to download the application form.
  • Zweig Group’s new website. We are completing our fully redesigned new website and we are excited. Connecting zweiggroup.com and thezweigletter.com will have extra benefits for The Zweig Letter’s readers. Christina Zweig Niehues talks more about this process in this issue, and why you should make sure you aren’t just putting a new skin on an increasingly corrupt skeleton when you are doing your website updates.
  • Zweig Leadership Institute. Speaking of training and development, I am really excited to share that we are also working on a concept that does not exist yet in the AEC industry: A platform we are going to call Zweig Leadership Institute, which will be an amazing online learning portal with its own independent certification board as a way to train and accredit your people to take increasing responsibility in your firm and to be equipped to drive return on investment greater than ever. Stay tuned for more about this exciting announcement.
  • M&A Next. Mergers and acquisitions is big business in AEC and the Zweig Group team has closed a record number of deals in 2021. As such, we are bringing back our M&A Next in-person summit in 2022. Join us in Charleston, South Carolina where the food and drinks are amazing, but the networking and learning around M&A will be even better. It’s not about what’s happened, but what’s next. Come learn about the future of M&A in AEC in Charleston April 28-29.

This year was definitely an elevated experience for many. Fueled by great people, a great program, and positive energy about the future, attendees really made this conference the best ever. I hope you’ll join us in Las Vegas from September 14-16, 2022 for the 2022 ElevateAEC Conference, ElevateHer Symposium, and Awards Gala. Cheers to a great 2021 and to an even better 2022! There’s never been a better time to tell the world how great a career in AEC is and how successful you can be!

Chad Clinehens is Zweig Group’s president and CEO. Contact him at cclinehens@zweiggroup.com.

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About Zweig Group

Zweig Group, three times on the Inc. 500/5000 list, is the industry leader and premiere authority in AEC firm management and marketing, the go-to source for data and research, and the leading provider of customized learning and training. Zweig Group exists to help AEC firms succeed in a complicated and challenging marketplace through services that include: Mergers & Acquisitions, Strategic Planning, Valuation, Executive Search, Board of Director Services, Ownership Transition, Marketing & Branding, and Business Development Training. The firm has offices in Dallas and Fayetteville, Arkansas.