It’s margin leak - profit lost between the signed contract and the paid invoice.
The client was happy. The team was delivering. The project looked healthy. But then closeout told a different story. The margin didn’t vanish - it got absorbed.
That gap is where we work.
We find the margin AEC firms lose
between contract and invoice.
Write-offs are one of three. Add utilization and subconsultant load and the picture changes. Every assumption here is visible and adjustable, and the box below translates your answers into the metrics 896 A&E firms are benchmarked on.1
Your Firm
Chargeability your business plan assumes, in hours.
What the timesheets actually show.
Pass-through work your PMs coordinate but your staff doesn't perform.
Estimated Annual Margin Leak
$0
The gap between what your capacity could have earned and what you actually billed and collected.
Measured by · unclassified time share
Measured by · write-down rate
Measured by · handoff acceptance rate
Salary plus burden, averaged across everyone on payroll.
Labor dollars charged to projects ÷ total labor cost. Not the same as your hours figure above.2
Everyone on payroll, billable or not.
Sub dollars grow faster than sub share. Holding your own net revenue constant, coordination volume rises as share ÷ (1 − share) — so the curve steepens as you lean harder on outside firms.
Annual coordination drag — sub component only
| Segment | Utilization | Net labor mult. | Labor cost / emp | Net rev. / emp | Op. profit on NR |
|---|
1 Benchmark figures are from the 47th Annual Deltek Clarity Architecture & Engineering Study, developed with CMG Consulting, surveyed January–March 2026 and reflecting firms' 2025 fiscal year performance — 896 firms across the United States and Canada. Size bands are Deltek's: small 0–50 employees, medium 51–250, large 251–750. High performers are firms with a net labor multiplier of 3.0 or higher and operating profit on net revenue of 15% or higher, 12% of participants.
2 Deltek measures utilization in dollars, not hours — labor cost charged to projects divided by the firm's total labor cost. Your hours-based figure and the Deltek figure will not match, and the distance between them is mostly your support headcount. Hours-based utilization published elsewhere runs far higher and is not comparable.
3 Realization benchmark of 87% is from the BQE CORE Engineering Benchmark Report (2025); BQE's 2026 reports put it at 83%. The 87% figure is used here as the more demanding of the two. Deltek does not publish a realization rate. Subconsultant coordination drag is a Beyond OpEx model, not an industry metric.
4 Tracking figures are from the 2026 Architecture & Engineering Industry Benchmark Report (Factor A/E, June 2026): 60% of firms do not know or track their realization rate, 42% cannot report a net profit margin, 40% do not track project profitability in real time, and 73% name scope creep as their largest budget threat. That sample skews small — roughly 80% of respondents have fewer than 20 employees — so read it as evidence of how common the gap is, not as a benchmark for a firm of your size.
This is an estimate built from your inputs and the assumptions above, not an audit. It sizes an opportunity rather than a cash figure — no firm recovers all of it, and that is not the goal. It is meant to tell you where to look first.
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