Top ten factors that impact profitability for architecture firms

{"version":"0.3.0","atoms":[],"cards":[],"markups":[["a",["href","https:\/\/www.aia.org\/pages\/6630599-abi-april-2023-business-conditions-soften-","target","_blank"]],["b"],["a",["href","https:\/\/www.aia.org\/articles\/6607580-attracting-and-keeping-architects-in-an-un?tab=library\u0026tools=true","target","_blank"]],["a",["href","https:\/\/aiau.aia.org\/courses\/2023-economic-update-3","target","_blank"]]],"sections":[[1,"p",[[0,[],0,"Nearly halfway\nthrough an unpredictable year, most architecture firms believe their earnings\nfor 2023 will be flat (plus or minus five percent). "]]],[1,"p",[[0,[],0,"Last year, firm\nrevenue was up seven percent on average, and 85 percent of firms were\nprofitable, according to AIA\u2019s most recent "],[0,[0],1,"Work-on-the-Boards survey."],[0,[],0," \u201cThose were\nhealthy numbers,\u201d said AIA\u2019s chief economist Kermit Baker, Hon. AIA, \u201cbut many\nfirms are in the midst of a transition from strong times to somewhat weaker\ntimes. It\u2019s fair to say this year is turning out to be more challenging.\u201d\nThough Baker says firms do not yet consider times to be dire, the slow down in\nbusiness cannot be ignored. "]]],[1,"p",[[0,[],0,"Baker shares the top ten factors, from highest to\nlowest, that have the potential to have the greatest negative impact on\nprofitability this year."]]],[1,"p",[[0,[1],1,"Staff Shortage - "],[0,[],0," Without teams to serve clients, meeting\ndeadlines and taking on new jobs creates a challenge."]]],[1,"p",[[0,[1],1,"Delayed, stalled, or canceled jobs - "],[0,[],0,"Client spending plans may change with a\nsluggish economy and higher \t\tconstruction costs. "]]],[1,"p",[[0,[1],1,"Staff Compensation - "],[0,[],0,"In 2023, firms offered healthy salary\nincreases, but those expectations are "],[0,[2],1,"harder to meet this year. "]]],[1,"p",[[0,[1],1,"Extended Project Schedules - "],[0,[],0,"Because of supply chain issues and labor\nshortages, many project timetables \t\thave been extended, eating away at staff\nresources and contract administration budgets. "]]],[1,"p",[[0,[1],1,"Firm Overhead - "],[0,[],0,"The cost of doing business \u2013 rent,\nhealthcare, insurance \u2013 is more expensive."]]],[1,"p",[[0,[1],1,"Level of competition: "],[0,[],0,"New design work is limited, so there are\nfewer jobs to win and more firms looking to win \tthem."]]],[1,"p",[[0,[1],1,"Level of fees: "],[0,[],0,"Despite\ninflation, firm fees are under pressure."]]],[1,"p",[[0,[1],1,"Difficulty receiving payment: "],[0,[],0,"Account receivables often are growing as\nclients look to delay payments."]]],[1,"p",[[0,[1],1,"Staff productivity: "],[0,[],0,"When firms cannot add staff, they look to\nmake current staff more productive, which often is a challenge in a remote work\nenvironment."]]],[1,"p",[[0,[1],1,"Cost of technology: "],[0,[],0,"Software, hardware, and training costs\nare all rising with inflation"],[0,[1],1,". "]]],[1,"p",[]],[1,"p",[[0,[1],1,"\nSave the date!"],[0,[],0," Join\nKermit Baker, AIA\u2019s Chief Economist, on "],[0,[1],1,"Thursday, July 20 "],[0,[],0,"at "],[0,[1],1,"2pm ET"],[0,[],0," to hear the next quarterly update of the industry\u0027s latest\neconomic data and what firms are reporting. Register for free "],[0,[3],1,"here"],[0,[],0,". "]]]]}