The 2026 Deltek Clarity industry studies, based on nearly 1,800 respondents from government contracting and architecture & engineering (A&E) firms, reveal a sector under dual pressure: rapid AI adoption without corresponding governance, and persistent talent shortages that constrain delivery capacity. The reports, now in their 17th (government contracting) and 47th (A&E) editions, benchmark performance across the full project lifecycle.
Key Findings: Government Contracting
- Growth with margin strain. Firms reported 15% average revenue growth in 2025, with 16% projected for 2026. Yet nearly 90% of respondents saw at least one declining financial metric. Primary drivers: rising labor costs (31%), higher overhead (28%), and increased subcontractor/vendor costs (24%).
- AI adoption is near-universal but governance lags. 90% of respondents are using or planning to use AI in at least one business function in 2026; generative AI adoption exceeds 90%. However, 45% are unclear on AI's ROI. Only 5% of IT/security teams report being "fully developed" in AI maturity; most are still piloting (37%) or scaling (38%). Top AI concerns: data privacy/security (37%), inaccurate forecasts (29%), and difficulty validating AI insights (26%).
- Compliance costs rising. 96% expect compliance costs to remain elevated or increase. 59% anticipate CMMC will apply to them; of those, 58% expect Level 2 certification. Top audit risk areas: cybersecurity and cost allocation.
Key Findings: Architecture & Engineering
- Demand steady, capacity constrained. Firms forecast 9.5% net revenue growth in 2026, but staff growth was only 1.2%, with turnover above 13%. Utilization declined to just under 60%, and operating profit fell to 16.7%.
- AI adoption accelerates, impact inconsistent. AI adoption rose from 53% to 70% year-over-year; generative AI usage from 64% to 78%. Yet only 38% reported measurable positive business impact from AI. 39% said it's too early or they're still piloting. A majority (59%) agree successful AI implementation will create significant competitive advantage.
- Digital transformation urgency rising. 93% reported a cyber attack attempt in the past three years; 1 in 5 firms suffered a successful attack with financial or reputational damage. 42% believe they could lose market share within two years without significant digital transformation (up from 33% in 2025). Top AI challenges: where/how to apply emerging tech (62%), integrating AI systems (56%), and data/cybersecurity (52%).
Tradeoffs
The reports highlight a paradox: firms are growing on paper while foundations are under strain. AI has moved from experimentation to expectation, but operational readiness, governance, and measurable ROI remain inconsistent. Talent and skills—especially AI literacy and data fluency—are the limiting factor, constraining delivery capacity even as demand remains strong. Integrated systems have become a competitive requirement, but many firms still rely on manual processes.
Bottom line
For project-based businesses, the path forward requires closing the gap between AI adoption and execution. Firms that strengthen data visibility, embed governance across the project lifecycle, and invest in AI literacy will be better positioned to handle rising compliance costs, talent constraints, and delivery pressure. The full reports, including detailed benchmarking data and longitudinal trend analysis, are available at the Deltek Clarity Hub.