Read the Planifi Guide to:
Forecasting in Architecture &
Engineering Firms
Executive Introduction: The Imperative of Foresight.
In the highly cyclical and project-driven world of Architecture and Engineering (A&E), the ability to forecast performance is the definitive characteristic of a resilient firm. For decades, the industry has largely operated on a lagging indicator basis, relying on retrospective financial reports generated after the close of a billing period to understand organizational health. This operational model, akin to driving a vehicle while looking exclusively in the rearview mirror, is no longer sustainable in a market defined by tight margins, talent scarcity, and rapid economic shifts. Modern leadership requires a dynamic, forward-looking capability —a windshield view that synthesizes project execution data, staff availability, and business development pipelines into a coherent vision of the future. This guide serves as a foundational operational manual for A&E leadership, designed to transition firms from reactive administration to proactive performance management. By leveraging the principles of integrated planning and utilizing advanced platforms like Planifi, firms can master the three critical pillars of forecasting: Project Performance (the micro-economy of the firm), Staff Capacity (the inventory of time), and Revenue Backlog (the financial fuel). We will explore the methodologies, metrics, and behavioral frameworks necessary to build a predictive practice, ensuring that decisions regarding hiring, resource allocation, and strategic pursuit are grounded in data rather than intuition.
How to Use This Guide: Each part builds from project-level discipline to firmwide foresight: Part I codifies project performance forecasting, Part II connects capacity to demand and hiring, Part III quantifies revenue and backlog, Part IV fuses these streams into integrated business planning, Part V details formulas and scenarios, and Part VI shows how to automate it in Planifi. Throughout, you’ll find meeting cadences, role-based utilization targets, and practical signals leaders can act on immediately
Why Now: The Cyclical A&E Context: The A&E sector’s exposure to interest rates, public capital cycles, and developer liquidity makes visibility into the next 3, 6, and 12 months mission-critical. The firms that consistently outperform are those that translate live project plans into staffing and revenue decisions weekly, not monthly, and align sales pursuits with credible delivery capacity. Forecasting is, therefore, not a financial task; it’s an operating system.
Part I: The Science of Project Performance Forecasting The fundamental challenge of an A&E firm’s financial success is the outcomes of individual projects balanced with utilization of staff. If the aggregate of a firm’s projects consistently deviates from budget and schedule without early warning, firm-wide forecasting becomes a process of guestimation. Therefore, the journey to accurate organizational foresight begins with Project Performance Forecasting. This requires a cultural shift away from static reporting and toward dynamic estimation that can begin with simply scheduling and maintaining project plans.
Better Forecasting Methods: A pervasive vulnerability in traditional design project management is the reliance on Percent Complete as a proxy for project health. Historically, Project Managers (PMs) often determine this metric based on the percentage of the budget consumed rather than the physical progress of the deliverables. For example, a PM might consider a project as 50% complete simply because 50% of the fee has been spent. This linear assumption—that expenditure equals progress—is the primary cause of the profit fade phenomenon, where projects appear healthy for months before suddenly revealing massive overruns in the final phases. To forecast accurately, firms must fundamentally shift their focus from Job-to-Date (JTD) metrics, which only quantify history, to Estimate at Completion (EAC), which forecasts the remaining project performance. The EAC represents the best current calculation of the total cost of the project at the moment of completion, accounting for both the sunk costs of the past and the anticipated costs of the future