How architecture firms are responding to the declining ABI

{"version":"0.3.0","atoms":[],"cards":[],"markups":[["a",["href","https:\/\/www.aia.org\/press-releases\/6691096-continuing-decline-in-architecture-billing","target","_blank"]],["strong"]],"sections":[[1,"h2",[[0,[],0,"As the ABI score continues to decline, AIA Chief Economist Kermit Baker, Hon. AIA, outlines the ways firms are adjusting as they plan for 2024. "]]],[1,"p",[[0,[],0,"For the third consecutive month, the "],[0,[0],1,"AIA\/Deltek Architecture Billings Index (ABI) "],[0,[],0,"score was less than 50, indicating an overall decline in billings at architecture firms. Though declines earlier this year were modest, the past two months have seen a significant drop-off. The disappointing ABI scores in 2023 are sparking concern as firm leaders ponder the trends and plan for the coming year. "]]],[1,"p",[[0,[],0,"\u201cThe recent movement in the ABI is very different than what we\u0027ve seen in the 25 years that we\u0027ve been collecting this information,\u201d said Baker, \u201cso, we didn\u0027t really know how to interpret this or how to label it, but it looks like it\u0027s turning into something more serious.\u201d"]]],[1,"p",[[0,[],0," The consecutive declines in billings were matched by the new project index, confirming that while billings decline, incoming work is also stalling. Project backlogs have declined ten percent since early 2022, down to 6.5 months. "]]],[1,"p",[[0,[],0," \u201cThat certainly diminishes the prospects that this is going to turn around anytime soon,\u201d said Baker. \u201cWhile not overly disconcerting, it is another indicator that business trends at architecture firms are moving in the wrong direction.\u201d"]]],[1,"p",[[0,[],0,"Overall, revenue for 2023 is flat. While 40% of firms estimate some growth, 20 percent expect none, and a third project a decline in billings. As firms look to 2024, few anticipate significant growth. Baker notes that trends impact firms differently based on location and work specialization, but adds, \u201cFlat revenue in the context of the growing costs of doing business is not a good mix.\u201d "]]],[1,"p",[[0,[],0,"The most significant cost increases firms anticipate in 2024 are for healthcare, other employee benefits, and technology investments. "]]],[3,"ul",[[[0,[1],1,"Healthcare "],[0,[],0,"- More than 3\/4 of firms indicate healthcare costs will increase, with a significant share thinking they will increase a lot. "]],[[0,[1],1,"Employee benefits"],[0,[],0," - 60% of firms felt that other employee benefits like paid time off and expenditures supporting remote workers will cost more in 2024."]],[[0,[1],1,"Technology"],[0,[],0," \u2013 2\/3 of firms anticipate a rise in the costs of technology and liability insurance. In this unpredictable economy, "]]]],[1,"p",[[0,[],0,"Baker says firms report a bit of frustration in terms of how they can respond."]]],[1,"p",[[0,[],0,"\u201cAll firms are probably watching their backlogs closely. We know about a third of firms are deferring capital investments and about a third said they are starting to think about or even implement outsourcing services. And we got a lot of comments wondering what they can do about labor,\u201d said Baker. "]]],[1,"p",[[0,[],0,"About 10 percent of firms are considering implementing a reduction in employee benefits. While this survey did not specially ask about staffing, some comments suggest firms are considering downsizing staff, freezing salaries, and reducing work hours. \u201cWhen you\u0027re thinking about or actually starting to cut staff - particularly as tight as the market has been for the last few years \u2013 I think that\u0027s a bit more drastic,\u201d said Baker. \u201cAnd it certainly suggests that some firms expect leaner times ahead.\u201d "]]]]}