Deltek has published its annual Clarity report that highlights trends and insights for UK Architecture, Engineering and Consulting Firms. Deltek also published reports for other regions as well. The 6th Annual study shows that the industry is both ambitious and optimistic for 2025.
83% of respondents were looking to increase profits, and 42% expect to increase headcount. One of the reasons behind the optimism is the impact of digital transformation during 2025. 64% anticipated increased profits following the introduction of AI.
Neil Davidson, Group Vice President, Professional Services Sector at Deltek, comments, “Professional services firms are already recognising the efficiency savings and growth opportunities provided by digital transformation. This year is a pivotal time for realising the benefits technology can bring as firms still look to grow in 2025.
“It’s promising to see that the shift in the use of technology is also underpinning greater confidence in tracking project metrics – something we have not seen in our past Clarity reports.
“The strides professional services firms have made in implementing advancements in technology ahead of schedule are further improving their ability to manage the factors that contribute to attaining KPIs. Successful tracking is vital for providing insight into core business metrics, the optimisation of processes, and supporting productivity to help firms ensure they stay on track to meet their goals.”
What is in the report
3Gem Research and Insights created the 43-page study. It was based on a survey of 200 senior strategic decision-makers in UK firms, with over 20 employees across Architecture, Engineering and Consulting Firms.
As with previous Clarity reports, this is a comprehensive study which includes data points, data visualisations and commentary.
The report is divided into five sections, after an introduction and executive summary, which goes through the six main themes in the report:
- Opportunities & Challenges
- Technology Trends & AI
- Corporate & Workplace Strategies
- Project Management
- Performance Metrics & Profitability
Each section also includes comments from industry leaders’ customers, though surprisingly, none from Deltek. Some, though not all, of the sections have a key findings section, and the report closes with a next steps/looking ahead section. That highlights the importance of investment in technology (including AI), cybersecurity and the next generation of employees.
Opportunities & Challenges
While there is optimism about 2025, there are notes of caution, with 83% concerned about recession in 2025, and equally likely are concerns over supply chain costs or rising interest rates. Importantly, all twelve concerns raised in the survey scored higher for 2025 than they did for 2024.
The top priorities vary slightly, with implementing AI being in the top three for all types of business. Architecture and Engineering firms also place investing in AI and improving cybersecurity in the top three. In contrast, Consultancy firms see delivering better client services/satisfaction as the top, with cybersecurity fourth.
Technology Trends & AI
Technology is seen as crucial to AEC businesses. Only 20% are what the authors determine as an advantaged stage of digital transformation. 52% believe they will be there in three years; Architecture firms believe they are the most advanced, with 64% being either mature or a laggard.
While the report does qualify the levels of maturity, it is a subjective measurement. The finishing line for digital transformation can advance every year and it would be interesting to know how many firms believe they are further forward than 2024.
On page 14, there is a very interesting chart which looks at tech in the importance of success against planning to invest. AI and cybersecurity score the highest, while the anomaly is disaster recovery and business continuity, which is important yet lacks investment. Does this mean firms are investing in protecting against a security incident rather than investing in recovering from one?
Firms are investing more in technology (68%), with small and large firms investing most in AI (87%/75%) and cybersecurity (87%/75%). Investing in AI has challenged and the report notes the top four initiatives that are assisting progress on digital maturity. The top two are:
- Create a strategic plan for implementing technology trends (50%)
- Identify technology partners (47%)
Organisations perceive investing in AI will have rewards. Disappointingly, it does not reveal whether investments to date have seen those perceived benefits, perhaps in the 2026 report. There is more confidence, though, with 61% perceive the primary benefit of effectively implementing AI is now increased profits, which has increased from 42% last year.
There are still concerns, though, with 79% believing that successful implementation of AI will lead to redundancies, up from 66% in 2024. For those that remain they believe job satisfaction will increase, 85% (2024-71%).
Corporate & Workplace Strategies
While 78% plan to increase their workforce in 2025, compared to 58% expected to do so in 2024. Key challenges remain a lack of training (48%), retention (47%) and a lack of employee engagement (34%). 84% of firms are prioritizing the recruitment of young talent, but many are unsure how to go about it. Firms see that fostering a culture of collaboration (51%) and continuous learning (49%) is key.
The report has an interesting look at sustainability but fails to provide the answer to the question of how important sustainability is. A qualitative element to the survey might have produced more insight. However, 76% are concerned about being unable to achieve ESG/Sustainability goals by their planned deadlines. With public demand the most likely driver (22%) it seems unlikely that the stick is big enough for firms to deepen investments.
Project Management
The section considers the project management challenges firms face in 2025. The top three are:
- Increased competition for top talent (30%)
- The adoption of Artificial Intelligence (AI) (30%)
- Increasing complexity of projects (28%)
While a challenge, AI is also seen as an enabler to help deal with the increasing project complexity by 40%. Managing project information is also seen as a challenge, with 44% indicating that sharing project files with team members effectively is a challenge. Can AI provide an answer to this? Top Project delivery challenges include technology integration (engineering 65%, Consulting 54%) and changes in client requirements (Consulting 54%).
The section also looks at project reporting of performance metrics and shows that confidence in reporting has increased. It does not explain why or how that has happened, though.
Performance Metrics & Profitability
Despite the advancement in the tracking of KPIs, there is still room for improvement. Interesting financial leaders see managing growth as the biggest challenge for 2025, compared to increasing profitability in 2024. Increasing profitability is behind other challenges as well, such as finding and retaining staff and cash flow.
Respondents also considered how they would look to increase profitability, with the top three responses:
- Automating month-end process – 30%
- Clients paying without the need to chase – 28%
- Balancing employee/cost ratio – 28%
- Reducing expenses – 28%
The report also considers gross profit margins, with 83% confident that margins will increase in 2025. Small to Medium sized firms are the most confident.
Enterprise Times: What does this mean
The Clarity report is a comprehensive look at the state of AEC professional services firms. However, the sample is quite small, and it is unclear which industries the consulting firms operate in. There may be some differences if that were broken down further.
However, there is optimism and a growing belief that AI will have a significant impact on business in 2025. Nonetheless, the proof points have not yet emerged, and the full picture of the impact of what AI will have on the business in terms of revenues, profits and jobs is unclear.
There is little doubt that firms cannot be left behind, though, and the authors offer some advice on how to approach AI projects.
Overall, this is a solid and informative study by Deltek and the authors. However, one that could have benefitted from some secondary research and possibly some qualitative interviews to shed some further light on the findings.
