Industry reports · Humanity Labs

Industry report

Employee-owned design firms bet on AI and new services as private equity buys their rivals

A briefing on large US architecture and engineering firms for anyone about to meet the people who run them.

As of October 14, 2026 · Companion to The Originals

Through September 2025, private equity and the firms it backs made more acquisitions of US design firms than employee-owned firms did, putting 2025 on track to be the first year they led. The employee-owned share of the 100 largest firms has fallen from 74% to 58% since 2017. At the same time, AI is starting to shrink the hours these firms bill. Seven leaders on our list, most running firms their employees own, are answering with their own AI, new digital businesses, and contracts paid for results rather than drawings.

The short version

  • Design firms sell expert hours, and employees own many of the largest. Public clients choose them on qualifications, then negotiate the fee. More
  • Engineers are busy, but architects are waiting. Engineering firms report a year of backlog, while architecture billings have shrunk in most months since October 2022. More
  • Five changes mark the innovators: designing with AI, building data and digital businesses, selling outcomes instead of drawings, rolling up smaller firms, and specializing in data centers, power, and water. More
  • Seven design firm leaders on our list are already making these changes, and three more outside it are making similar moves. Each profile ends with a question to ask. More
  • Clients pick on qualifications, and firms pay to stay visible and insurable. More public work now goes to builders who hire their own designers. More
  • Ask who keeps the hours AI saves, and who will own the firm next. Don't assume they compete on price or ask if they'd sell. More

How the business works

Employees own many of the largest design firms, which sell expert hours to clients who hire on qualifications

About 1.73 million people worked in US architecture, engineering, and related services in 2025, up 26% since 2014, according to the Bureau of Labor Statistics. BLS The 500 largest design firms ranked by the trade weekly Engineering News-Record (ENR) took in $158.7 billion in 2025, up 7.4%, and ENR credits much of the growth to infrastructure for AI. ENR

The leaders on our list run several different kinds of design firm, which outsiders often lump together. The table shows the main types.

Type of firmWhat it doesExamples (ENR 2026 rank)
Architecture and interiorsDesigns buildings and interiors, billed mostly by design phaseGensler (13), Perkins&Will (33), CannonDesign (80)
Multidiscipline and building engineeringArchitecture plus mechanical, electrical, and plumbing (MEP) engineering for hospitals, factories, and data centersSalas O'Brien (31), HKS (37), SSOE
Infrastructure and water engineeringTransportation, water, power, and site work for cities, utilities, and statesCDM Smith (23), Kimley-Horn (8), Woodard & Curran (86)
Testing and geotechnical engineeringSoils, materials testing, inspection, and environmental workTerracon (19)
Engineer-buildersDesign plus construction at a fixed priceBurns & McDonnell (7), Black & Veatch (14)
Public consolidatorsListed companies that buy firms of all kindsJacobs, AECOM, Tetra Tech, WSP

Ranks from ENR's 2026 Top 500 Design Firms.

Most public work goes to the best-qualified firm, not the cheapest

Under the federal Brooks Act and similar laws in most states, a public agency ranks design firms on their qualifications, then negotiates a fee with the top-ranked firm, and moves to the next only if talks fail. Cornell LII ACEC Firms bill most work by the hour at rates marked up over salary, and they track utilization (the share of hours billed to clients) and the multiplier (revenue per dollar of salary charged to projects).

Employees own many of the largest firms, but buyers are closing in

Burns & McDonnell, HDR, and Terracon each say they're 100% employee-owned. Burns & McDonnell HDR Terracon But private equity firms and the firms they back made 47% of US design-firm acquisitions in the first three quarters of 2025, against 45% for employee-owned buyers, according to the deal adviser Morrissey Goodale. One in four of ENR's top 100 design firms is now backed by private equity, up from 4% in 2017. ACEC A record 512 deals closed in the US in 2025. Consulting-Specifying Engineer

The economics in 2026

Engineers are busy while architects wait for projects to start

$158.7Brevenue of ENR's 500 largest design firms in 2025, up 7.4% source
12 mo.median backlog at engineering firms in the third-quarter 2026 survey by the American Council of Engineering Companies (ACEC) source
47%of 2025 design-firm acquisitions made by private equity and the firms it backs source
16.7%operating profit on net revenue at architecture and engineering (A&E) firms in Deltek's 2026 study source

Notable change

Private equity has overtaken employee-owned firms as a buyer of design firms

Employee-owned firms made 80% of design-firm acquisitions in 2016 and 50% in 2024. In 2025, private equity and the firms it backs pulled ahead, with 47% of deals through September. The employee-owned share of ENR's top 100 fell to 58%. ACEC

Perkins&Will's CEO, Phil Harrison, told Bisnow that private equity's arrival has pushed up prices. In September 2025, 12% of commercial architecture firms told the American Institute of Architects (AIA) that they were considering a sale, up from 6% in 2018. Bisnow

So what: The leaders on our list mostly run employee-owned firms that are buying, not selling. Ask what they tell their employee-owners when a buyer calls.

The AIA and the software company Deltek survey architecture firms each month on their billings. The chart shows the longest slump in the index's history.

Architecture firms' billings have shrunk in 42 of the 47 months since October 2022

So what: Inquiries about new projects have mostly stayed above 50 while billings stayed below it, so architects are talking to clients about work that isn't turning into signed projects. Engineering firms are busier: they rate data centers and water as their strongest markets. Ask a leader which side of that split the firm sits on, and what it's doing about the other.

Billings indexInquiries index (new project inquiries)
Architecture Billings Index by month, 2019-01 to 2026-08Pandemic303540455055606550 = no changebelow: shrinking20192020202120222023202420252026Low: 29.5 in 2020-04
The American Institute of Architects (AIA) and Deltek survey architecture firms each month; a reading above 50 means more firms reported rising billings than falling ones. First-published values, from AIA's releases or, for earlier months, coverage quoting them. Inquiries are shown where a source gave them. Hover for each month; click or tap for details.
Show as a table
MonthBillingsInquiriesSource
2019-0155.3n/aCalculated Risk
2019-0250.3n/aCalculated Risk
2019-0347.8n/aCalculated Risk
2019-0450.5n/aCalculated Risk
2019-0550.2n/aCalculated Risk
2019-0649.1n/aCalculated Risk
2019-0750.1n/aCalculated Risk
2019-0847.2n/aCalculated Risk
2019-0949.759.0Calculated Risk
2019-1052.057.9Calculated Risk
2019-1151.960.9Calculated Risk
2019-1252.558.7Calculated Risk
2020-0152.257.9Calculated Risk
2020-0253.456.5Calculated Risk
2020-0333.323.8Calculated Risk
2020-0429.528.4Calculated Risk
2020-0532.038.0Calculated Risk
2020-0640.049.3Calculated Risk
2020-0740.0n/aCalculated Risk
2020-0840.0n/aCalculated Risk
2020-0947.0n/aCalculated Risk
2020-1047.5n/aCalculated Risk
2020-1146.352.0Calculated Risk
2020-1242.652.4Calculated Risk
2021-0144.9n/aCalculated Risk
2021-0253.361.2Calculated Risk
2021-0355.666.9Calculated Risk
2021-0457.970.8Calculated Risk
2021-0558.569.2Calculated Risk
2021-0657.171.8Calculated Risk
2021-0754.665.0Calculated Risk
2021-0855.664.7Calculated Risk
2021-0956.661.8Calculated Risk
2021-1054.362.9Calculated Risk
2021-1151.059.4Calculated Risk
2021-1252.0n/aCalculated Risk
2022-0151.0n/aCalculated Risk
2022-0251.362.5Calculated Risk
2022-0358.063.9Calculated Risk
2022-0456.562.3Calculated Risk
2022-0553.563.9Calculated Risk
2022-0653.258.2Calculated Risk
2022-0751.056.1Calculated Risk
2022-0853.357.9Calculated Risk
2022-0951.753.6Calculated Risk
2022-1047.7n/aCalculated Risk
2022-1146.652.0Calculated Risk
2022-1247.5n/aAIA
2023-0149.3n/aAIA
2023-0248.0n/aAIA
2023-0350.4n/aAIA
2023-0448.5n/aAIA
2023-0551.0n/aAIA
2023-0650.1n/aAIA
2023-0750.0n/aAIA
2023-0848.1n/aAIA
2023-0944.853.7AIA
2023-1044.3n/aAIA
2023-1145.356.9AIA
2023-1245.453.1AIA
2024-0146.253.8AIA
2024-0249.556.0AIA
2024-0343.654.9AIA
2024-0448.354.8AIA
2024-0542.452.1AIA
2024-0646.451.6AIA
2024-0748.252.4AIA
2024-0845.752.4AIA
2024-0945.751.6AIA
2024-1050.354.1AIA
2024-1149.654.1AIA
2024-1244.151.6AIA
2025-0145.651.4AIA
2025-0245.547.8AIA
2025-0344.147.7AIA
2025-0443.248.0AIA
2025-0547.251.4AIA
2025-0646.853.6AIA
2025-0746.253.4AIA
2025-0847.250.3AIA
2025-0943.350.1AIA
2025-1047.654.8AIA
2025-1145.351.4AIA
2025-1248.552.9AIA
2026-0143.849.3AIA
2026-0249.452.3AIA
2026-0349.856.8AIA
2026-0448.357.7AIA
2026-0544.549.4AIA
2026-0647.356.1AIA
2026-0746.652.6AIA
2026-0847.250.8AIA

Architecture and engineering firms added 353,000 jobs from 2014 to 2025, a 26% rise

So what: The industry kept growing through the architecture slump, and openings across professional services have fallen 42% since their 2022 peak. The shortage now is narrower: 96% of engineering firms in ACEC's latest survey have jobs that require a professional engineer's license. Ask a leader how AI changes the way junior staff learn the judgment those licenses require.

People employed in architecture and engineering services (millions)

0.0M0.5M1.0M1.5M2.0M’142014: 1.38M1.38M2015: 1.40M’162016: 1.40M2017: 1.44M’182018: 1.47M2019: 1.51M’202020: 1.50M2021: 1.54M’222022: 1.60M2023: 1.66M’242024: 1.70M’252025: 1.73M1.73M

Job openings across professional and business services (millions)

0.0M0.6M1.2M1.8M2.4M’142014: 0.89M0.89M2015: 1.15M’162016: 1.18M2017: 1.08M’182018: 1.25M2019: 1.27M’202020: 1.18M2021: 1.86M’222022: 2.15M2.15M2023: 1.60M’242024: 1.31M’252025: 1.25M1.25M
Annual averages of monthly, not seasonally adjusted figures from the Bureau of Labor Statistics. Employment covers architectural, engineering, and related services. Openings cover all professional and business services, a much wider group that includes A&E firms, because the openings survey doesn't break out A&E. Sources are in the table.
Show as a table
YearA&E employmentProfessional services openings
20141.38M0.89M
20151.40M1.15M
20161.40M1.18M
20171.44M1.08M
20181.47M1.25M
20191.51M1.27M
20201.50M1.18M
20211.54M1.86M
20221.60M2.15M
20231.66M1.60M
20241.70M1.31M
20251.73M1.25M

Three pressures sit under the numbers:

  • AI is starting to cut the hours firms sell. In ACEC's research, firm leaders said the work that has traditionally built engineers' judgment, "running calculations, checking drawings, researching standards, preparing documentation," is the work AI is best placed to absorb. ACEC More than half of engineering firms are investing in staff dedicated to AI. ACEC
  • Federal transportation money is on a short extension. Congress extended the 2021 infrastructure law's programs only to December 11, 2026. CRS The extension left out the law's advance funding for many transportation programs, according to the National Association of Counties. NACo
  • Liability costs are rising. 73% of the 15 insurers Ames & Gough surveyed plan rate increases in 2026, 60% saw bigger claims in 2025, and 80% say clients' contract terms now affect whether a firm is insurable. Ames & Gough

What is changing

Design firms are changing in five ways, starting with what they sell

The biggest shift is what firms sell. A firm that sells hours at a multiple of salary earns less when AI cuts the hours, so leaders are testing fixed fees, digital products, and contracts tied to results. ACEC's research arm says fixed-fee contracts leave firms "better positioning to leverage artificial intelligence." ACEC

From 2023 to 2026, the firms changing most are doing one or more of five things. The first three match the three groups of leaders on our list.

1. Designing with AI

Firms are moving AI from pilots to firmwide tools, with rules and a named leader. Gensler uses AI in some way on most of the roughly 3,000 projects it handles a year, and trained more than 3,000 staff on one image tool in four days. Business Insider SSOE rolled out Microsoft Copilot to all staff in 2024. SSOE Salas O'Brien's staff submitted nearly 600 ideas to its Project AI in 2025. Salas O'Brien

On our list: Jordan Goldstein, Vince DiPofi, Darin Anderson.

2. Building data and digital businesses

Some firms run separate software and data companies whose income doesn't depend on hours. CDM Smith launched Trinnex, a software subsidiary, in 2022 and doubled its resources in 2026. GlobeNewswire Terracon bought the location-data company Pivvot in 2021. PR Newswire

On our list: Gayle Packer, Tim Wall.

3. Selling outcomes, not drawings

A few firms sell design, construction, operation, and financing as one package, or long advisory relationships instead of one set of drawings. Woodard & Curran formed an Integrated Solutions Division in January 2026 and already runs more than 90 water facilities for clients. Woodard & Curran CannonDesign buys consultancies to turn three-year projects into 30-year client relationships. Bisnow

On our list: Alyson Watson, Brad Lukanic.

4. Rolling up smaller firms

Employee-owned firms are buying too. Salas O'Brien says it has merged with more than 40 firms in ten years, and Terracon's purchase of The Transtec Group in 2025 was its 26th since 2017. Salas O'Brien Terracon Others sold: Morgan Stanley Capital Partners took a majority of Olsson, a 2,000-person engineering firm, in January 2026. Business Wire

5. Specializing in data centers, power, and water

Engineering firms rated data centers (+83) and water (+82) their strongest markets in the summer of 2026. ACEC Firms are buying the skills: STV bought the utility power engineering firm CHAMPS in September 2026. Business Insider

The innovators

Seven design firm leaders on our list are rebuilding how their firms work

Seven architecture and engineering leaders are among The Originals. Most run firms their employees own, and each has made a dated, costly change to how the work is done. The highest scorers are Jordan Goldstein of Gensler (6.7), Vince DiPofi of SSOE (5.9), and Gayle Packer of Terracon (5.8).

18 of these 22 dated moves came in 2023 or later

So what: Most of these leaders made their biggest changes in the last three years, as AI tools arrived and buyers started calling. Asking what has paid off so far, and what hasn't, is a natural way to open a conversation.

Designing with AIBuilding data and digital businessesSelling outcomes, not drawings
Dated moves by 7 leaders on our list, 2019 to 2026Pandemic20192020202120222023202420252026Brad LukanicBrad Lukanic, 2019: Buys Blue Cottage to sell healthcare strategy beyond designBrad Lukanic, 2025: Tells Building Design + Construction it wants 30-year client ties after Clarient and SRG dealsBrad Lukanic, 2026: Buys Ennead Architects, its largest acquisition to dateGayle PackerGayle Packer, 2021: Buys geospatial data firm Pivvot to sell location intelligenceGayle Packer, 2023: Creates a growth organization, a technology chief, and a business transformation roleGayle Packer, 2025: Names a national manager of AI and data scienceGayle Packer, 2025: Buys The Transtec Group, its 26th acquisition since 2017Vince DiPofiVince DiPofi, 2022: Makes AI a central business strategy and sets up an AI governance teamVince DiPofi, 2024: Rolls out Microsoft Copilot to all staff and funds full-time AI staffVince DiPofi, 2025: In-house dev team pilots a resource forecasting and staffing toolTim WallTim Wall, 2022: Launches Trinnex, a software and digital strategy subsidiaryTim Wall, 2026: Doubles Trinnex by moving CDM Smith's mapping and asset team into itDarin AndersonDarin Anderson, 2023: Rebuilds ownership so merging firms can roll equity into the firmDarin Anderson, 2024: Sells a minority stake to Blackstone while keeping employee ownershipDarin Anderson, 2025: Launches Project AI; staff submit nearly 600 AI ideasDarin Anderson, 2026: Creates a senior vice president of data and AI to scale AI with governanceJordan GoldsteinJordan Goldstein, 2024: Wins Fast Company top 10 for an office-to-housing conversion algorithmJordan Goldstein, 2025: Builds proprietary platforms so clients co-create designs in real timeJordan Goldstein, 2026: Puts AI on most of its ~3,000 projects a year after an AI sandboxAlyson WatsonAlyson Watson, 2025: Opens share ownership to every employee after one yearAlyson Watson, 2025: Adds four municipal operations contracts; now runs 90+ water plantsAlyson Watson, 2026: Launches an Integrated Solutions Division to design, build, and operate
Each dot is one costly change to how the work is done. Click a dot for a short summary and a link to the story.
Show as a table
YearLeaderMoveSource
2019Brad LukanicBuys Blue Cottage to sell healthcare strategy beyond designBuilding Design + Construction
2021Gayle PackerBuys geospatial data firm Pivvot to sell location intelligencePR Newswire
2022Tim WallLaunches Trinnex, a software and digital strategy subsidiaryGlobeNewswire via Yahoo Finance
2022Vince DiPofiMakes AI a central business strategy and sets up an AI governance teamSSOE Group
2023Darin AndersonRebuilds ownership so merging firms can roll equity into the firmThe Deal
2023Gayle PackerCreates a growth organization, a technology chief, and a business transformation roleTerracon
2024Darin AndersonSells a minority stake to Blackstone while keeping employee ownershipOrange County Business Journal
2024Jordan GoldsteinWins Fast Company top 10 for an office-to-housing conversion algorithmGensler
2024Vince DiPofiRolls out Microsoft Copilot to all staff and funds full-time AI staffSSOE Group
2025Alyson WatsonOpens share ownership to every employee after one yearWoodard & Curran
2025Alyson WatsonAdds four municipal operations contracts; now runs 90+ water plantsWoodard & Curran
2025Brad LukanicTells Building Design + Construction it wants 30-year client ties after Clarient and SRG dealsBuilding Design + Construction
2025Darin AndersonLaunches Project AI; staff submit nearly 600 AI ideasSalas O'Brien
2025Gayle PackerNames a national manager of AI and data scienceTerracon
2025Gayle PackerBuys The Transtec Group, its 26th acquisition since 2017Terracon
2025Jordan GoldsteinBuilds proprietary platforms so clients co-create designs in real timeGensler blog
2025Vince DiPofiIn-house dev team pilots a resource forecasting and staffing toolSSOE Group
2026Alyson WatsonLaunches an Integrated Solutions Division to design, build, and operateWoodard & Curran
2026Brad LukanicBuys Ennead Architects, its largest acquisition to dateBisnow
2026Darin AndersonCreates a senior vice president of data and AI to scale AI with governanceSalas O'Brien
2026Jordan GoldsteinPuts AI on most of its ~3,000 projects a year after an AI sandboxBusiness Insider
2026Tim WallDoubles Trinnex by moving CDM Smith's mapping and asset team into itGlobeNewswire via FinancialContent

Designing with AI

Jordan Goldstein
Jordan GoldsteinOn the list · 6.7 of 10
Co-CEO, Gensler · San Francisco; the largest US architecture firm by revenue, with about 6,000 professionals

Jordan has put AI into most of Gensler's roughly 3,000 projects a year through generative tools, several now built into the firm's own interface. Gensler ranked among Fast Company's most innovative companies in 2024 for an algorithm that tests whether office buildings can become housing.

“What we've found is that AI really helps bring more ideas into the process and enables teams to explore their ideas more effectively.” source

Ask aboutWhich parts of a Gensler project AI has changed most, and how the firm prices work that now takes fewer hours.

Vince DiPofi
Vince DiPofiOn the list · 5.9 of 10
CEO, SSOE Group · Toledo, Ohio; about 1,500 employees in the US, Mexico, and India; CEO since 2019, with Greg Brogley named CEO-elect in October 2026

Vince made AI a central part of SSOE's strategy in 2022, setting up data rules and an AI governance team, then rolled out Microsoft Copilot to all staff in 2024. In 2025 the firm's own developers piloted a tool to forecast staffing for new projects. He hands day-to-day leadership to Greg Brogley in January 2027.

“First and foremost, we established data ethics and privacy protocols, which are governed by our Board of Directors.” source

Ask aboutWhat he's handing Greg Brogley on AI that he wishes he'd had in 2022, and who to talk to now: him or his successor.

Darin Anderson
Darin AndersonOn the list · 5.3 of 10
Chairman and CEO, Salas O'Brien · Irvine, California; more than 5,100 people; more than 95% of staff are owners, and Blackstone holds a minority stake

Darin launched Project AI in 2025, collecting nearly 600 ideas from staff and funding the best into tools for design markups, commissioning, and proposals. In June 2026 he named a senior vice president of data and AI. He has grown the firm through more than 40 mergers in ten years, selling a minority stake to Blackstone in 2024 to help fund them.

“AI helps us learn faster, design smarter, and deliver solutions that truly raise the bar for our company and clients, while keeping the innovation, care, and excellence that define our work.” source

Ask aboutHow Salas O'Brien keeps employee ownership meaningful with an outside investor, and which Project AI tools are now used on every job.

Building data and digital businesses

Gayle Packer
Gayle PackerOn the list · 5.8 of 10
Chair, President, and CEO, Terracon · Olathe, Kansas; employee-owned engineering, testing, and consulting firm with more than 8,000 people

Gayle is moving Terracon from field testing toward data products. It bought the location-data firm Pivvot in 2021, created growth and technology roles in 2023, named a national manager of AI and data science in 2025, and made its 26th acquisition since 2017.

“The organizational and leadership changes we're making will enable us to grow and transform how we meet changing market dynamics going forward.” source

Ask aboutWhat clients pay Terracon for data that they used to get only as a test report.

Tim Wall
Tim WallOn the list · 5.1 of 10
Chairman and CEO, CDM Smith · Boston; employee-owned water, environmental, and infrastructure engineering firm with 7,000 employees

Tim launched Trinnex, a software and digital strategy subsidiary, in 2022, and in February 2026 doubled its resources by moving CDM Smith's mapping and asset management team into it. Trinnex now sells six software products to water utilities.

“We're not waiting for the future” source

Ask aboutHow much of CDM Smith's income Trinnex could earn without billing hours, and how the two businesses share clients.

Selling outcomes, not drawings

Alyson Watson
Alyson WatsonOn the list · 5.4 of 10
CEO and Chair, Woodard & Curran · Portland, Maine; employee-owned water and environmental firm with more than 1,300 employees; CEO since 2021

Alyson formed an Integrated Solutions Division in January 2026 to sell design, technology, construction, operation, and financing as one package, calling it one of the biggest organizational changes in the firm's history. The firm already runs more than 90 water facilities. In 2025 she opened share ownership to every employee after one year.

Ask aboutWhat a water utility buys from the Integrated Solutions Division that it couldn't buy from separate firms, and how the firm gets paid for results.

Brad Lukanic
Brad LukanicOn the list · 5.1 of 10
CEO, CannonDesign · Employee-owned architecture and consulting firm with about 1,600 people before buying Ennead; CEO since 2016

Brad is turning a design firm that held clients for one three-year project into one that keeps them for 30 years, by buying strategy and smart-building consultancies. In April 2026 he bought Ennead Architects, CannonDesign's seventh acquisition in about two years and its largest.

“We're thinking growth for differentiation.” source

Ask aboutWhat a client buys from CannonDesign in year ten of a relationship, and how the firm charges for it.

Three leaders outside the list are making similar moves

These leaders aren't on the list. Each has made a change worth asking about.

Rodney Chester
Rodney Chester
CEO and Board Chair, Gresham Smith · Nashville; architecture and engineering firm with $355 million in gross revenue and 27 offices, owned by its staff

Rodney added a chief digital transformation officer to his executive team in January 2026, and the firm has built its own assistant that bundles generative design tools. Business Wire

“AI only supplements the design journey that our professionals guide our clients through.” source

Ask aboutWhat the new digital transformation chief is meant to change in a project team's week.

Brad Strittmatter
Brad Strittmatter
CEO and Chairman, Olsson · Lincoln, Nebraska; more than 2,000 employees; founded 1956

Brad sold a majority of the employee-owned firm to Morgan Stanley Capital Partners in January 2026, with employees reinvesting.

“We chose MSCP because they align with our people-first culture and our commitment to meaningful employee ownership.” source

Ask aboutWhat employee ownership means at Olsson now, and what he'd tell an employee-owned firm weighing the same offer.

Brian Coltharp
CEO, Freese and Nichols · Texas; more than 1,300 employees in 12 states

Brian led Freese and Nichols to a second Malcolm Baldrige National Quality Award in 2024, and in 2026 hired leaders to bring AI into project delivery. Freese and Nichols

“The rigorous Baldrige application process provided us with invaluable feedback that will help shape our future efforts and strengthen our role as sustainable partners for our colleagues and clients.” source

Ask aboutHow the firm's quality system decides where AI can be trusted in a design.

The wider field

Public consolidators and AI software makers set the pace design firms react to

A few of the largest firms and fast-growing vendors shape what the leaders above can do. They set the going price for acquisitions, staff, and software.

Large firms and buyers

  • AECOM A public consolidator whose long-term plan assumes AI gains and a move toward fixed-fee and value-based contracts.
  • Jacobs ENR's largest design firm; bought the rest of PA Consulting for about $1.6 billion in March 2026.
  • Stantec Bought the architecture firm Page, its main source of acquisition growth in 2026.

Companies selling the tools

  • Autodesk Makes Revit and the other design software most firms use; added AI agents across its products in September 2026.
  • Augmenta Builds AI that designs electrical systems; raised $10 million more in 2025.
  • Motif A cloud design platform from former Autodesk leaders; raised $46 million in early 2025.

How clients find a firm

Design firms pay for proposals, data, and insurance to reach clients who choose on qualifications

Notable change

More public work now goes to builders who pick their own designers

States keep widening design-build, where one contract covers design and construction and a builder usually leads. In 2026 alone, Utah, Tennessee, Georgia, South Carolina, and Illinois widened or extended it; Georgia removed its cap on design-build highway projects. DBIA

On those jobs the design firm often works for the builder, not the owner, and insurers count design-build among the leading drivers of bigger claims. Insurance Business

So what: Ask a leader how much of the firm's work is won as the lead designer and how much as a builder's subconsultant, and whether that share is changing.

There are no referral fees in design. Public agencies choose on qualifications and then negotiate the fee. Cornell LII Private owners often hire an adviser to run the selection and pay it about 1% to 5% of construction cost. Mastt The design firm's own costs come from chasing work and staying insurable: proposals, project data, liability insurance, and, increasingly, design staff abroad.

45%median win rate on proposals at design firms source
73%of design-firm liability insurers plan rate increases in 2026 source
80%of those insurers say clients' contract terms affect whether a firm is insurable source
512US design-firm acquisitions in 2025, a record source

Design firms pay four of the seven channels between them and the work

So what: The three channels that pick the firm (public agencies, owners' advisers, and builders leading design-build) charge it nothing. The firm pays to be seen and to be insurable: proposals, project data, liability insurance, and offshore help. Ask a leader how much of the firm's work is won as the lead designer and how much as a builder's subconsultant.

The design firm pays the channelThe design firm pays no fee

Fee levels come from laws, trade surveys, and providers' own pages; several providers don't publish prices. Each links to its source.
Show as a table
ChannelExamplesDoes the firm pay?What it costs the firmSource
Public clients choosing on qualificationsFederal agencies, state transportation departments, water utilities, municipalitiesNoNo channel fee; the firm bears pursuit cost, and the fee is negotiated after selectionCornell LII
Owner's representatives and program managersOwner-hired project and program managersNoOwner pays about 1% to 5% of construction cost; the design firm pays nothing directlyMastt
Builders leading design-buildGeneral contractors leading design-build and progressive design-build pursuitsNoNo fee paid by the design firm; it gives up the prime role and takes on more design-build riskDBIA
Proposals and marketingIn-house principals and project managers, plus outside marketing consultants used by more than half of firmsYesMedian proposal win rate 45%; dollar cost per pursuit not publishedZweig Group
Lead and procurement dataDodge Construction Network (Clearlake, STG), ConstructConnect (Roper Technologies), GovSpendYesDodge priced by quote based on data scope, geography, and users; others not publishedDodge Construction Network
Liability insurers and brokersSpecialist brokers such as Ames & Gough and the A&E practices of large brokers, placing about 15 leading carriersYes73% of insurers plan 2026 rate increases, mostly up to 5%; premium as a share of revenue not publishedAmes & Gough
Offshore and nearshore productionEmbedded-team vendors such as WeCollabifyYesVendor says firms save 45% against $90,650 US total compensation for a mid-level designer or engineerWeCollabify

Principals lead business development, but project managers do most of it

At 89% of firms, principals and owners are primarily responsible for winning work, but project managers do 59% of the effort, the design-firm consultancy Zweig Group found in 2026. Zweig Group The median firm won 45% of its proposals.

Insurers shape which contracts a firm can sign

Liability insurance is a design firm's main protection against claims that its design was wrong. Insurers now look closely at clauses that make a designer defend the client from the start of any claim, which the engineers' trade group calls uninsurable. ACEC A few states limit those clauses, and others are widening design-build:

StateYearWhat it does
California2017Limits a designer's duty to defend and indemnify a public or private client to its own share of fault. STRUCTURE magazine
North Carolina2019Voids clauses that make designers defend or indemnify clients beyond their own fault. ACEC
Georgia2026Removes the cap on design-build highway projects, so builders lead more of the state's road work. DBIA
South Carolina2026Authorizes progressive design-build for the state transportation department. DBIA

Five leaders run the main channels

Linda Bauer Darr and Carole Wedge lead the two professional bodies. The three below them run the association for the people who write proposals, the main benchmarking and deal adviser, and a specialist insurance broker.

Linda Bauer Darr
Linda Bauer Darr
President and CEO, American Council of Engineering Companies (ACEC) · Washington; the trade association of US engineering firms; CEO since 2018

Linda leads the group that defends qualifications-based selection in Congress and the states, and whose research arm surveys engineering firms every quarter. With transportation programs extended only to December 2026, ACEC's members are watching the next highway bill.

“A shutdown has a detrimental impact across the economy, causing delays in the permitting and execution of critical infrastructure projects and hurting the clients and communities we serve.” source

Ask aboutWhat ACEC is telling member firms to plan for in their transportation work for 2027.

Carole Wedge
Carole Wedge
Executive Vice President and CEO, American Institute of Architects (AIA) · Washington; named CEO in September 2025 after 17 years as CEO of the architecture firm Shepley Bulfinch

Carole leads the architects' professional body, which publishes the billings index in this report, at a time when AI is lowering the cost of producing drawings. She has urged architects not to compete on price.

“Sometimes I worry that we're our own worst enemies when we think the answer to winning a project is to offer it for cheaper.” source

Ask aboutHow architects should keep clients from treating AI's savings as a reason to cut fees.

Marci D. Thompson
Marci D. Thompson
CEO, Society for Marketing Professional Services (SMPS) · The association for marketing and business development staff at design and construction firms

Marci runs the group that trains the people who write design firms' proposals, and in November 2026 it holds a summit on AI in that work.

“Our responsibility is not to assume the relationship will continue. It is to steward it in a way that gives people a reason to continue choosing it.” source

Ask aboutWhere members see AI changing which firms win work.

Chad Clinehens
Chad Clinehens
President and CEO, Zweig Group · A consultancy that benchmarks design firms and advises on mergers and ownership transitions

Chad's firm publishes the fee and marketing benchmarks many design firm leaders use, and advises firms on selling or transferring ownership. Its 2026 data show firms refining hourly billing rather than leaving it.

“Marketing and business development are becoming more integrated, more data-driven, and more closely connected to firm strategy.” source

Ask aboutWhich way the firms he values are moving on pricing: tighter hourly rates or fixed fees.

Jared J. Maxwell
Jared J. Maxwell
Vice President and Partner, Ames & Gough · Boston; partner at a specialist broker of liability insurance for architects and engineers

Jared's firm surveys the insurers that cover design firms each year; in 2026 most planned rate increases and flagged AI as a new risk.

“While AI can enhance efficiency, analytics and design optimization, its use must be supported by disciplined controls, transparency and accountability,” source

Ask aboutWhat a design firm can say about its AI controls at renewal that changes the premium.

Trade-offs

Six trade-offs divide the design firm leaders you'll meet

Most leaders on our list have picked a side on several of these trade-offs. In our reading, asking which side they picked, and why, gets to their strategy faster than asking about trends.

1Stay employee-owned or sell

CannonDesign stays owned by its architects and has made eight acquisitions in two years, including Ennead Architects. Bisnow

KGD Architecture sold to Signal Hill Equity Partners, a private equity firm making its third design-firm deal in eight months. Bisnow

AskIf a buyer offered a top price tomorrow, what would your employee-owners have to believe to say no?

2Refine hourly billing or move to fixed fees

Firms using salary-based billing multipliers rose from 18% to 30% in 2026, a sign they're tightening the hourly model. Zweig Group

ACEC's research arm says fixed-fee contracts position firms to keep the gains from AI. ACEC

AskOn which kinds of projects would you take a fixed fee tomorrow and keep the AI savings?

3Build your own AI or join a bigger firm

Brad Lukanic says CannonDesign launched its own generative AI tool. Bisnow

A co-founder of the design firm A+I said joining Perkins&Will made sense because AI is "better done with friends." Bisnow

AskWhat's the one AI capability that would make a client pick you, and do you own it or rent it?

4Chase data centers or spread the bet

Engineering firms rated data centers their strongest market in every ACEC survey of 2026, at +83 in the third quarter. ACEC

Texas paused new data center permits on September 21, 2026, pending audits of power and water demand. JD Supra

AskWhat share of next year's revenue could disappear if two big data center programs paused at once?

5Lead the design or work for the builder

States widened design-build in 2026, a method in which a builder usually holds the contract and hires the designer. DBIA

Insurers count design-build among the leading drivers of bigger claims against designers. Insurance Business

AskWhen you're a builder's subconsultant, who owns the client relationship?

6Grow by buying firms or by hiring

Salas O'Brien made ten acquisitions in 2025, more than any other buyer. Consulting-Specifying Engineer

In mid-2026, 33% of engineering firms said they'd turned down work for lack of staff in the previous six months, down from 51% at the end of 2024. BD+C

AskWhat did your last acquisition give you that you couldn't have hired in three years?

Before a first conversation

Design firm leaders want to talk about AI, pricing, and who owns the firm next

Engineering firms are confident about their own books and nervous about the economy: in ACEC's survey of 591 firms in the summer of 2026, the median backlog was 12 months, but more expected the US economy to weaken than strengthen. ACEC Architecture firms have had a longer, harder slump. Leaders in both talk about the same three things: what AI does to the hours they sell, how to train young staff when AI does the work they used to learn on, and who will own the firm next. ACEC

Six mistakes mark an outsider

  • Assuming design firms compete on price. Public work is bought on qualifications first, and Carole Wedge says architects who cut fees to win are "our own worst enemies." Architectural Record
  • Treating architects and engineers as one business. Their fees, licenses, and liability differ, and insurers see more severe claims against structural and civil engineers than against architects. Insurance Business
  • Saying AI will replace engineers. Most firm leaders in ACEC's research disagree; the risk they see is in governance, quality, and how juniors learn. ACEC
  • Asking whether they'd sell. In an employee-owned firm the CEO answers to the employee-owners. Ask how they think about ownership over the next decade.
  • Calling the firm a contractor. They're consultants, even when design-build puts them under a contractor.
  • Assuming all of construction is slow, or all of it is booming. Architecture billings have shrunk for three years while engineers report a year of backlog. Let the leader say where the firm sits.

Ten questions get a design firm leader talking about the work

  1. If AI takes 30% of the hours out of a set of construction documents, who keeps that 30%: you, the client, or nobody?
  2. Have you priced any work as a fixed fee because your teams got faster? What did clients say?
  3. How are you teaching a second-year engineer judgment if AI is doing the calculations and drawing checks they used to learn on?
  4. When a buyer backed by private equity calls, what's the honest reason you say no?
  5. Can your next generation of owners afford to buy out the current one, and what's the plan if they can't?
  6. Your peers report a year of backlog. Where is yours thickest, and which markets would you rather not be in next year?
  7. Data centers are the hottest market and now the most political. How do you size that bet after the Texas permit pause?
  8. Which contract clauses are you now walking away from?
  9. Who decides which AI tools the firm uses, and who's accountable when an AI-assisted drawing is wrong?
  10. What do you wish your largest client understood about how you make money?

Where they gather

Eight events bring these leaders together before June 2027

The ACEC convention draws engineering firm owners to Washington, and the AIA conference draws architects. The SMPS AI summit and ENR FutureTech draw the people changing how firms work.

DatesEventPlace
Nov 4-6, 2026Design-Build Institute of America Conference & ExpoCleveland, Ohio
Nov 18-20, 2026SMPS AEC.AI SummitAustin, Texas
Feb 10-12, 2027SMPS Southern Regional ConferenceFort Worth, Texas
Mar 22-24, 2027SMPS Southeast Regional ConferencePonte Vedra Beach, Florida
Apr 18-21, 2027ACEC Annual Convention and Legislative SummitWashington, DC
Apr 26-30, 2027DBIA conferences on transportation, aviation, and waterDenver
May 4-5, 2027ENR FutureTechSan Francisco
May 19-22, 2027AIA Conference on Architecture and Design (AIA27)Philadelphia

Glossary

Twenty-two terms come up in the first ten minutes

Backlog
Signed work not yet done, often counted in months of revenue.
BIM
Building information modeling: a 3D data model of a building that drawings and quantities come from.
Brooks Act
The 1972 federal law that requires agencies to choose design firms on qualifications.
Construction administration
The designer's work during construction, answering builders' questions and reviewing their submittals.
Design-bid-build
The owner hires a designer, then bids the finished design to builders.
Design-build
One contract covers design and construction, usually led by a builder with the design firm as its subconsultant.
Duty to defend
A contract clause making the designer pay the client's legal costs from the start of a claim, before fault is found.
ESOP
Employee stock ownership plan: a trust that holds company shares for employees, a common way to buy out founders.
Fixed fee
A set price for a defined scope, so the firm keeps the savings if it works faster.
MEP
Mechanical, electrical, and plumbing engineering: the building systems.
Mini-Brooks Act
A state law that applies qualifications-based selection to state and local design contracts.
Multiplier
Revenue divided by the salary cost charged to projects; how many dollars a firm earns per dollar of billable salary.
Net service revenue
Revenue after pass-through costs such as subconsultants; the number firms compare themselves on.
Owner's representative
A consultant the owner hires to manage designers and builders on its behalf.
PE license
A professional engineer's license; a licensed engineer seals drawings and takes legal responsibility for them.
Professional liability insurance
Insurance that pays claims that a firm's design work was negligent.
Progressive design-build
Design-build where the team is chosen on qualifications first and the price is set once the design has advanced.
QBS
Qualifications-based selection: the client ranks firms on experience and approach first, then negotiates a fee with the top one.
SD, DD, CD
Schematic design, design development, and construction documents, the three main design phases fees are split across.
Standard of care
What a reasonably careful professional would have done; the legal test for negligence claims against designers.
Time and materials
Billing hours at agreed rates plus expenses, the default for most design work.
Utilization
The share of paid staff hours billed to client projects.

Read more

Three pieces explain AI, deals, and risk in design firms