As a CFO who works with B2B SaaS companies, I spend a lot of time studying customer economics—understanding not just what our products do, but what they're worth to the businesses that use them. In my work with Part3, I've gotten a front-row seat to the financial reality facing architecture firms during the construction administration phase.

Practices that appear healthy on the surface are quietly losing profits during CA. While most firm leaders focus on winning new projects and managing design costs, the profit killer often lurks in CA—buried in email threads, scattered spreadsheets, and countless hours of administrative work that never makes it onto a timesheet.

Let me show you the numbers.

The true cost of CA inefficiency

Construction administration typically represents approximately 20% of total architectural fees, yet most firms dramatically underestimate the time required to manage this phase effectively. 

Here's what the math actually looks like:

Consider a mid-sized firm with 20 professionals spending an average of 15 hours per week on CA administrative tasks—tracking submittals in spreadsheets, searching through email chains for the latest RFI response, downloading and organizing field reports, and chasing down consultant approvals.

The calculation:

• 20 professionals × 15 hours/week = 300 hours weekly

• 300 hours × 50 weeks = 15,000 hours annually

• At an average billing rate of $150/hour = $2.25 million in potential billable time

But here's the painful reality: most of these hours are never billed. They're absorbed as administrative overhead or written off as scope creep. Even if you could capture just 50% of this time through process efficiency, that's $1.125 million in recovered revenue.

According to the AIA's 2024 Firm Survey data, the average architecture firm operates at profit margins between 10-14%, with only 27% achieving 15% or higher. With margins this tight, even modest improvements in CA efficiency can have meaningful impacts on profitability.

The profitability impact of delays

The cascading effects of slow CA processes extend far beyond wasted administrative time. Every delayed submittal review or late RFI response creates downstream consequences that directly impact your firm's profitability:

1. Delays extend project timelines

When submittal reviews take seven to ten days instead of two to three days, construction schedules slip. General contractors adjust their timelines, and suddenly your team is providing construction administration services for 14 months instead of 12. That's 16% more time investment on a fixed fee—an instant margin compression.

2. Delays create scope creep without compensation

Delays lead to change orders, which lead to additional review cycles, which lead to more meetings and coordination. Before you know it, your project team has provided 30% more CA services than originally scoped, but because the documentation is scattered across emails and phone calls, there's no clear record to support a fee adjustment.

3. Delays lead to fee write-offs

When clients dispute value or question extended timelines, architecture firms often write off portions of their fees to maintain client relationships. Poor CA documentation makes these disputes nearly impossible to defend. When you can't produce a clear record of when submittals were received, when consultants responded, or what caused delays, you lose the ability to protect your fees.

Turning inefficiency into opportunity

Part3's platform data shows that firms typically achieve 20% faster submittal processing and 30% faster RFI response times.

To put that in financial terms: consider a hypothetical mid-sized firm processing 500 submittals and 200 RFIs annually. If each submittal review previously took an average of 4 hours (including coordination, documentation, and follow-up) and each RFI took 2 hours, that's 2,400 hours annually. A 20-25% efficiency gain translates to 480-600 hours recovered—worth $72,000-90,000 in billable time at a $150/hour rate. For firms struggling with fee realization, recovering even half of that previously lost time can mean $36,000-45,000 in improved margins annually.

The risk premium: When poor documentation becomes liability

Perhaps the most frightening cost of inefficient CA processes isn't what you lose in billable hours—it's what you risk in liability exposure.

Claims against architects frequently center on failures during the CA phase:

• Failure to catch submittal discrepancies that led to construction defects

• Inadequate field observation resulting in non-conforming work

• Missing or unclear communication about design intent

• Lack of documentation showing due diligence in reviewing contractor work

When these claims arise, legal fees alone can range from $300-800 per hour, and cases often drag on for months or years. Even when claims are covered by insurance, the reputational damage and increased premiums can haunt a firm for years.

The common thread in most CA-related claims? Inadequate documentation. 

When you can't prove when a submittal was reviewed, who approved it, what comments were made, and how discrepancies were addressed, you're defending yourself with one hand tied behind your back. Legal defense costs alone—with attorneys billing $300-800 per hour—can quickly consume significant portions of a project's fee, not to mention potential settlement costs or insurance deductibles.

The budget allocation question: What should CA tools cost?

Here's where many architecture firm leaders get stuck: "How much should we spend on CA technology?"

Let's reframe the question with actual numbers. 

Consider a firm generating $5 million in annual revenue with 20% coming from CA services ($1 million). Based on Part3's data showing firms achieve 20-30% time savings on submittal and RFI processing, let's conservatively estimate that improved CA systems could recover 10-15% of CA-related capacity that's currently lost to administrative inefficiency ($100,000-150,000). 

If you could recapture even half of those losses:

The ROI math:

• Potential recovered revenue: $50,000-75,000 (50% of efficiency gains)

• Technology investment: $17,000/year

• Net benefit: $33,000-58,000 annually

• ROI: 194-341% in Year 1

And this conservative calculation only accounts for direct time savings. It doesn't include:

• Reduced fee write-offs from better documentation

• Avoided claim costs from improved records

• Lower insurance premiums from demonstrated risk management

• Competitive advantages from faster turnaround times

• Improved client satisfaction and repeat business

When you consider that CA represents about 20% of your fees, investing even under 2% of CA revenue in specialized tools ($17,000 on a $1M CA practice) would be remarkably modest.

The question isn't whether you can afford CA technology—it's whether you can afford not to have it.

Strategic recommendations for architecture firm leaders

1. Start by measuring your current state

You can't improve what you don't measure. Implement time tracking specifically for CA administrative tasks for one month. The results will likely shock you.

2. Calculate your true CA cost structure 

Break down not just design review time, but all the administrative overhead: email management, file organization, log updates, consultant coordination, meeting scheduling, Project Files, and documentation preparation.

3. Establish baseline metrics 

Pick 3-5 key performance indicators from the list above and start tracking them consistently. Use them to create quarterly scorecards for your CA performance.

4. Evaluate technology against your actual costs

When assessing CA platforms, compare the subscription cost against your calculated efficiency losses, not against an arbitrary technology budget percentage.

5. Consider the insurance implications

Discuss your CA documentation practices with your professional liability carrier. Many insurers offer premium discounts for firms that can demonstrate robust documentation and risk management practices.

6. Train your team on the business case 

Project managers and CA leads need to understand these numbers. When they see how administrative inefficiency impacts firm profitability, they become advocates for process improvement rather than resistors to change.

The bottom line

Construction administration doesn't have to be a profit drain. With the right systems, processes, and technology, CA can become a competitive advantage—a way to deliver better service, reduce risk, and protect your margins.

The architecture firms thriving today aren't necessarily winning more work or charging higher fees. They're the ones who've figured out how to deliver the same (or better) quality services with 20-30% less administrative friction. They're capturing and documenting their value, protecting their fees, and building systematic defenses against liability.

In an industry where one-third of firm leaders cite profitability as their top concern for 2025, the firms that master CA efficiency will have a measurable advantage.

The question for your firm is simple: Are you willing to let about 20% of your fees, or more slip through the cracks of inefficient CA processes? Or will you invest in the systems and tools needed to capture that value?

The math makes the answer clear. 

Now it's time to act on it. 

This article is a guest post from Part3’s CFO, Giovanna Payne, of SaaSCFO.