Market Watch

2024 AE Industry Forecast: Good Times Ahead

Rollin’, rollin’, rollin’

Shaking aside interest rate hikes, labor and material cost volatility, and geopolitical turmoil, the AE industry thrived in 2023—and it looks like the good times will continue to roll into 2024. Eighty percent of architecture, engineering, and environmental consulting firm executives who attended Morrissey Goodale’s Texas and the South M&A and Business Symposium in October expect 2024 to be an even better year for their firms than 2023. “With backlogs robust, inflation cooling, and federal legislation continuing to boost the transportation, manufacturing, and clean energy markets, the AE industry is again poised for growth in 2024,” says Morrissey Goodale Director of Market Intelligence Rafael Barbosa.

Good to great 

Although American Institute of Architects (AIA) member firms reported their fourth consecutive month of declining billings in November 2023, they remain flush with backlogs and generally upbeat heading into 2024. More than half of surveyed firms expect 2024 to be good (46%) or great (13%), while the remainder foresee a challenging (18%) or so-so (22%) year ahead.

Hot spots 

Dodge Construction Network forecasts a 7.3% boost in the value of U.S. construction starts in 2024 after a 0.9% bump in 2023, while ConstructConnect projects construction put-in-place investment to rise 2.0% in 2024 after a 5.6% increase in 2023. Propelled by massive federal spending from the Infrastructure Investment and Jobs Act, CHIPS Act, and Inflation Reduction Act, transportation, manufacturing, and clean energy are expected to be hot markets. The American Road & Transportation Builders Association predicts the total value of transportation construction will climb 14% in 2024 with highway construction up 16%. Dodge projects the value of new starts to swell by 25% for bridges, 23% for streets, and 16% for manufacturing. 

Out of the basement 

Having passed the bottom, single-family homebuilding is forecasted to rebound if mortgage rates start to fall by the middle of 2024 as expected. The National Association of Home Builders (NAHB) forecasts a 3.3% upturn in single-family housing starts in 2024 after two consecutive years of decline. However, the NAHB predicts a 19% drop in multi-family housing starts. ConstructConnect projects the value of residential construction put-in-place to rise by 2.1% in 2024 after a 6.2% drop in 2023. To gain invaluable insights into the evolving market dynamics, trends, and game-changing shifts set to shape 2024, register for Morrissey Goodale’s AE Market Intelligence Webinar to be held on January 23.

Technology Corner

ChatGPT Exposes AE Firms to Risks

Risky business

ChatGPT and similar large language models hold the potential to be powerful content-creation tools for producing proposals, social media posts, website copy, and other marketing materials. Using content generated by artificial intelligence (AI) technology, however, could expose firms to risks far beyond regurgitating generic boilerplate sprinkled with inaccuracies. Nearly 300 risk executives surveyed by Gartner in the third quarter of 2023 identified “mass generative AI availability” as among the top three emerging risks confronting their firms.

Not strictly confidential

Unless users explicitly opt out, information entered into ChatGPT is incorporated into its training dataset. That means one user’s input could be another user’s output, which is why the ChatGPT FAQs warns: “Please don’t share any sensitive information in your conversations.” Samsung employees learned this the hard way after inputting confidential source codes and uploading meeting summaries to create minutes, highlighting the risk of staff unwittingly disseminating proprietary company and client information. Brent Britton, founder and chairman of CoreX Legal, warned attendees at a 2023 Society for Marketing Professional Services webinar examining AI in AEC marketing, “Don’t take your confidential client RFP and use ChatGPT to write the response because you may be violating your nondisclosure.”

Large language models have been trained on enormous quantities of online documents, which likely included copyrighted material. The New York Times and high-profile authors have recently sued OpenAI and Microsoft, the creators of ChatGPT, for the unauthorized use of published materials to train automated chatbots. Based on how they were trained, AI models could generate content that potentially violates copyright and intellectual property protections. Users who reproduce that content could be unknowingly posting plagiarized material. It also remains unclear as to whether AI-generated content can be protected as a company’s intellectual property. “So, not only do you not own everything you produce by AI, but you can also be sued if it’s too close to the content it was based on,” Britton says. 

Vigilance required

In many firms, employees have easy access—but few guidelines—in using these AI tools. Firm leaders should ensure employees are aware of the legal risks posed by ChatGPT and similar programs. Some companies have prohibited entering sensitive organizational or personal data into public tools, while others have altogether banned the use of ChatGPT. Have employees inform leadership about any use of these programs and consult with competent legal counsel about any potential concerns. 

The New Workplace

Middle Managers Stretched to Breaking Point

Stuck in the middle

Middle managers have never had it easy. Already in the difficult position of enacting policies they had little input in creating while keeping direct reports happy and productive, many middle managers now face the further challenge of implementing (sometimes unpopular) return-to-office mandates and overseeing remote workforces. Inside AE firms struggling with staffing, middle managers are often stretched the thinnest to ensure projects are completed on time and on budget. As the bridge between firm leadership and the rank-and-file, middle managers can only bear so much weight—and studies have found they are increasingly reaching a breaking point in a post-pandemic workplace. 

No satisfaction

According to the 2024 Workplace Trends report from employer review website Glassdoor, middle managers are the least satisfied with their jobs. Middle managers reported a sharp drop in work-life balance satisfaction over the course of 2023 while those above and below them on the corporate ladder reported little change. Nearly half (46%) of global middle managers surveyed by the Workforce Institute at UKG in 2023 said they were likely to quit within the year because of stress, while a September 2023 Gallup study found that managers were more likely than non-managers to be burned out, disengaged, and job-hunting.

Ripple effects

Paying close attention that middle managers aren’t stretched too thin not only allows them to thrive—but those who work for them as well. A 2021 MetLife study found employees with supportive mangers are more likely to feel productive (+46%), successful (+82%), engaged (+81%), and motivated (+110%) than those lacking managerial support.

Training days

In addition to regular, meaningful check-ins with the C-suite, middle managers can benefit from greater training and development on best practices in employee engagement, performance development, and effective communication with team members. According to Gallup, only 48% of managers strongly agree they currently have the skills needed to be exceptional at their jobs. In addition, only 30% of hybrid managers have ever received formal training on how to lead hybrid teams. Offering coaching support and professional development opportunities can boost engagement and prevent burnout among middle managers. 

Searching for an external Board member?

Our Board of Directors candidate database has over one hundred current and former CEOs, executives, business strategists, and experts from both inside and outside the AE and Environmental Consulting industry who are interested in serving on Boards. Contact Tim Pettepit via email or call him directly at (617) 982-3829 for pricing and access to the database.

Are you interested in serving on an AE firm Board of Directors? 

We have numerous clients that are seeking qualified industry executives to serve on their boards. If you’re interested, please upload your resume here.

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