Most Architecture and Engineering Firms Can't Say Whether They're Actually Profitable, New Benchmark Finds

Factor A/E's 2026 A&E Industry Benchmark Report reveals an industry that is busy, growing, and confident about AI, yet often flying blind on the numbers that decide whether the work pays off

CHICAGO, June 10, 2026 /PRNewswire/ -- Architecture and engineering firms across North America are keeping their teams busy and their clients loyal, but a large share have little real-time visibility into whether their projects are making money. That is the central finding of the 2026 Architecture & Engineering Industry Benchmark Report, released today by Factor A/E, the project management software built for A&E firms.

The report finds that 42% of firms cannot report their own net profit margin, 60% either do not know or do not track their realization rate (the share of billable time that turns into collected revenue), and 40% do not track project profitability in real time, even though 73% name scope creep as the single biggest threat to their budgets. The result is an industry where 56% of firms report budget overruns on more than 10% of their projects, often from problems that are visible only after it is too late to course-correct.

"The picture that emerges is not an industry in trouble, it's an industry that is profitable, but often without a clear view of what's driving that profitability." said Leslie Heller, Director of Growth, Factor A/E. "Firms are clearly talented and in demand. What many are missing is the operational visibility to know, in the moment, which projects are healthy and which are quietly losing money."

Busy, but not always in control
Utilization across the industry is healthy on the surface—58% of firms report utilization rates of 71% or higher yet 42% are operating below that threshold or are not tracking utilization at all. Meanwhile, the day-to-day work of running projects is eating into the work clients actually pay for with 44% of firms saying project management tasks are the number-one thing pulling their teams away from design, with client communication and approvals close behind.

Resource and project management remain largely manual. Seven in ten firms manage their people across projects through meetings, spreadsheets, or no formal process at all, and half assign staff to projects based on gut feel alone.

Getting paid is slow
Cash flow is a recurring pressure point. 70% of firms wait 31 or more days to collect payment after sending an invoice, and 22% wait longer than 60 days, a lag that hits smaller firms hardest, since they often absorb project costs up front.

Loyal clients, but little feedback
The relationship side of the business is a genuine strength: three in four firms say at least half of their clients are repeat customers. Yet 60% have no formal way to measure client satisfaction, leaving firms to rely on reputation and momentum without knowing what is driving or quietly eroding their pipeline.

Confident about AI, uneven on readiness
Looking ahead, 78% of firms say AI and automation will have the biggest impact on the A&E industry in the years to come, by far the most-cited trend. But the data points to a readiness gap. Firms that still rely on disconnected tools and manual processes may find the shift to AI-assisted workflows far more challenging than those with connected systems in place. Economic uncertainty (cited by 48% as their biggest five-year challenge) and talent shortages (28%) round out the concerns, even as 54% plan to expand their services or enter new markets in the next 12–24 months.

"The firms best positioned for the next five years aren't necessarily the biggest, they're the ones building the operational foundations now," said Leslie Heller, Director of Growth, Factor A/E  "Getting visibility into margins, realization, and forecasting in place is what turns AI from a buzzword into a real advantage."

Methodology
The 2026 Architecture & Engineering Industry Benchmark Report is based on a survey of architecture and engineering firms across the United States and Canada. Respondents were predominantly small to mid-sized practices, roughly 80% with fewer than 20 employees split across architecture (57%), engineering (38%) and related disciplines (5%).

The full report, including all benchmark data and charts, is available at https://factorapp.com/guides/2026-ae-industry-benchmark-report.

About Factor A/E
Factor A/E is a project management platform built specifically for architecture and engineering firms. Launched in 2021, Factor brings project planning, time tracking, resource scheduling, invoicing, and real-time reporting into one connected system, helping firms cut administrative work and protect their billable time. In 2025, Factor A/E joined Total Synergy, a global leader in A&E practice management. Factor A/E serves firms across North America and integrates with QuickBooks Online. Learn more at factorapp.com.

SOURCE Factor A/E