TZL 1593 (web)

July 14, 2025, Issue 1593 WWW.ZWEIGGROUP.COM

TRENDLINES

NSR per full-time employee

$145,000 $155,000 $165,000 $175,000 $185,000 $195,000

Fractional CFOs offer flexible, expert financial guidance to help AEC firms grow, reduce risk, and improve efficiency. Understanding the fractional CFO

Zweig Group’s 2025 Financial Performance Report shows that net service revenue per total staff has steadily increased over the past five years, reaching $186,413 in 2025. This upward trend reflects greater efficiency and revenue generation per employee across AEC firms. Participate in a survey and save on a Zweig Group research publication.

T he term fractional chief financial officer (or FCFO) is appearing more frequently in industry conversations – and for good reason. If you’ve ever thought your firm needed deeper financial insight, stronger planning, or more strategic financial resources, a fractional CFO may be the answer. Whether your firm is looking to grow, safeguard profits, or optimize the balance sheet, bringing in a seasoned financial expert on a part-time or project basis could provide the clarity and direction you need. HOW FRACTIONAL CFO ENGAGEMENTS WORK. A fractional CFO brings senior-level financial expertise at a fraction of the cost of a full-time hire. Depending on your firm’s needs, this professional may serve as a strategic advisor, hands-on implementer, or even a board member. While most engagements follow a similar process, the scope and fee structure are always tailored to fit the size, complexity, and goals of each individual firm. The engagement typically begins with a discovery phase that includes expectation setting, goal definition, and initial analysis. This preliminary process – usually lasting two to four weeks – involves a comprehensive financial review and leadership interviews, culminating in a report that outlines key findings and recommendations. If the firm chooses to move forward, the next phase finalizes scope, time commitment, and pricing. Engagements are most often billed hourly and can be configured flexibly to align with budget constraints and strategic objectives. THE WHY. If you’re wondering whether a fractional CFO is right for your firm, it starts with understanding the core financial questions every AEC firm leader should be able to answer: ■ Do you have a clear picture of your financial risk? Consider how your firm would be affected by an unexpected slowdown or external disruption. ■ Are you operating as effectively and efficiently as possible? Evaluate your return on investment in both labor and indirect costs, including insurance coverage, overhead allocation, and overall expense management.

Dathan Gaskill

FIRM INDEX MKN......................................................................8

Ware Malcomb.............................................2

Wilson & Company, Inc.......................10

MORE ARTICLES n JENNIFER NELSON: Insights from the One Big Beautiful Bill Page 3 n MARK ZWEIG: Going through a change program? Page 5 n MICHELLE LITTLE: From blueprints to job sites Page 7 n JARED MAXWELL: Insurers signal rising risk for AEC firms Page 9

See DATHAN GASKILL, page 2

THE VOICE OF REASON FOR THE AEC INDUSTRY

ON THE MOVE WARE MALCOMB ANNOUNCES PROMOTION OF CLAUDIO BREDA TO DIRECTOR, ARCHITECTURE IN NEWARK OFFICE Ware Malcomb, an award-winning international design firm, announced Claudio Breda has been promoted to Director, Architecture in the firm’s Newark, New Jersey office. In this role, he will lead the architecture team, while also providing support to the interiors group. Breda has more than 23 years of industry experience, with a resume that includes a variety of healthcare, hospitality, workplace, industrial, office, institutional, technology and manufacturing projects. He has been instrumental in expanding the reach of Ware Malcomb’s architecture studio particularly to the healthcare industry, and this represents his second promotion since joining the firm’s Newark team in 2021.

“With licensure in 11 states and a collaborative, hands-on leadership style, Claudio has built trust with clients and teammates alike,” said Jon Anderson, regional director, Architecture. “He has been a steady mentor and leader, driving quality and growth across the region, and we congratulate him on this well-earned promotion.” Breda earned his bachelor’s degree in architecture from Pratt Institute in Brooklyn, New York, and is a Licensed Architect in Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, Pennsylvania, New Jersey, Delaware, and Virginia. He has earned professional certificates and designations from The National Council of Architectural Registration Boards, American Institute of Architects, and U.S. Green Building Council.

DATHAN GASKILL , from page 1

■ Do you receive the information you need to make timely, informed decisions? Ask whether your reporting processes give you actionable insights on operations, clients, and projects – when you actually need them. ■ Are your systems and people aligned with your goals? Think about whether your team and tools are working well together. Is your labor utilization rate where it should be? Is your markup aligned with your value? ■ What’s the cost of inefficiency? Outdated systems and a lack of timely project data can create costly delays and misalignment – how much could you be losing? ■ What’s the true cost of making improvements – and what’s the potential return? Weigh the investment in new systems or staff against the potential savings and effectiveness gains. Navigating the financial side of your AEC firm can be complex – but you don’t have to do it alone. A fractional CFO offers a flexible, scalable way to access the strategic insights and financial oversight your firm needs to grow, adapt, and succeed in today’s unpredictable market. From improving operational efficiency to clarifying risk and measuring ROI, bringing in the right expertise can unlock real value. Zweig Group’s financial experts understand the unique challenges of the AEC industry. Whether you’re looking for board-level insight, ongoing financial planning support, or a one-time strategic assessment, we offer the benchmarking, industry knowledge, and guidance to help you operate more effectively. Let us help you move beyond gut instinct and toward confident, data-backed financial leadership. Learn more about Zweig Group’s Performance consulting services here. Dathan Gaskill is a Performance consultant at Zweig Group. Connect with him at dgaskill@zweiggroup.com.

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Chad Clinehens | Publisher cclinehens@zweiggroup.com Sara Parkman | Senior Editor & Designer sparkman@zweiggroup.com Tel: 800.466.6275 Email: info@zweiggroup.com Online: zweiggroup.com/blogs/news LinkedIn: linkedin.com/company/22522 Instagram: instagram.com/zweiggroup Twitter: twitter.com/ZweigGroup Facebook: facebook.com/p/Zweig- Group-100064113750086 Published continuously since 1992 by Zweig Group, Fayetteville, Arkansas, USA. ISSN 1068-1310. Issued weekly (48 issues/year). © Copyright 2025, Zweig Group. All rights reserved.

ELEVATEAEC CONFERENCE & AWARDS GALA The largest in-person gathering of industry leaders and award-winning firms, the 2025 conference promises to be bigger and better than ever with a jam-packed agenda designed to help you connect, learn, and celebrate like never before. Join us September 9-11 in San Antonio, Texas. Learn more!

THE ZWEIG LETTER JULY 14, 2025, ISSUE 1593

OPINION

New tax law creates major planning opportunities – R&D, bonus depreciation, and corporate rates shift, with key deadlines looming. Insights from the One Big Beautiful Bill

W hen new legislation rolls out, especially one as sweeping as the recently passed One Big Beautiful Bill Act, there’s a lot of excitement, confusion, and critical need for interpretation.

Stambaugh Ness’ recent webinar, available now, breaks down what we know so far, and, most importantly, what your business should be doing next. We’re still early in the implementation phase, and while the intended changes to tax law are clear, the devil is in the details, as the saying goes. We now need to look to rule makers to clarify and provide procedural steps for implementation. That said, here’s a recap of the key insights you need to know. A QUICK HISTORY: HOW WE GOT HERE. The groundwork for this bill dates to the 2017 Tax Cuts and Jobs Act, which introduced a variety of business and individual tax cuts, many of which were set to sunset by the end of 2025. The new bill resets the playing field, making many of those expiring provisions permanent and introducing changes across business and individual taxation, incentives, and expensing. WHAT’S STAYING. TCJA provisions made permanent: ■ Flat corporate rate: The 21 percent flat corporate tax rate remains and is now permanently codified, replacing the old graduated system.

R&D EXPENSING: GAME-CHANGER FOR INNOVATION INVESTMENT. One of the biggest wins in the bill is the return of full expensing for domestic research and experimentation, or R&E, starting after December 31, 2024. This allows companies to immediately deduct eligible R&D costs, an enormous cash flow and strategic

Jennifer Nelson, CPA, MBA

planning opportunity. Key elements include:

■ Section 174A: Newly introduced for permanent expensing of domestic R&E. ■ Section 174 amended: Foreign research costs must still be amortized over 15 years. ■ Retroactive opportunity: Small businesses (under $31M in average gross receipts for the prior three years) may choose to amend returns to capture deductions pre-2025.

Expensing post December 31, 2024: Firms over $31M gross revenue threshold can recoup the capitalized expenses on returns filed for tax years beginning after December 31, 2025 either fully in one year, over two years, or over the remaining amortization period. Firms under the $31M gross revenue threshold can also elect to recoup the capitalized expenditures in the same manner as large taxpayers (in lieu of amending returns).

■

ACA penalty repeal: The Affordable Care Act penalty tax is permanently removed.

■

■ Expanded deduction landscape: Several key TCJA tax provisions (R&D expensing, bonus depreciation, and qualified business income deductions) are now permanent fixtures.

See JENNIFER NELSON , page 4

THE ZWEIG LETTER JULY 14, 2025, ISSUE 1593

GREEN INCENTIVES WINDING DOWN. Several energy and environmental tax credits are being phased out at a faster-than- expected pace: ■ 45L credit (for energy-efficient residential properties): Ends after 2026 ■ Clean Vehicle Credits (new and commercial): End after September 30, 2025 ■ Alternative Fuel Vehicle Refueling Property Credit: Ends after June 30, 2026 ■ Clean Electricity Production & Investment Credits: End after December 31, 2027, for wind and solar EMPLOYEE RETENTION CREDIT (ERC) CRACKDOWN. The IRS is barred from making payments on ERC claims for Q3 and Q4 of 2021 that were filed after January 31, 2024. In addition, penalties have been expanded and the statute of limitations extended to six years, a clear signal that enforcement is ramping up. PLANNING CONSIDERATIONS: WHAT YOU SHOULD BE DOING NOW. While this bill offers significant opportunities, there’s no one-size-fits-all approach. Here’s what we recommend: 1. Model your tax scenarios. Especially around: ■ Section 174 R&D: Firms under $31M in average gross receipts will have the option of amending 2022-2024 or to accelerate capitalized expenses in 2025. ■ If you are a pass-through entity, evaluation of past distributions and basis considerations are key. ■ Bonus and section 179 depreciation: Time your capital expenditures to maximize deductions. ■ Overpayments: If you paid high estimated taxes for 2025 based on prior law, consider: Fourth quarter and year-end cash planning will be critical, Roth conversions, accelerated charitable giving, capital gains harvesting, and/or increased retirement contributions. 2. Watch for state nonconformity. Many states may not conform immediately (or at all) to federal changes. SN’s State and Local Tax Advisory team can help you navigate this. 3. Stay cautious on amended returns. Amending past returns can delay refunds, increase IRS scrutiny and potentially shift benefits to different owner groups if there have been ownership changes. Consider your goals before filing. 4. Prepare for IRS delays. Policy guidance is likely to lag. In the meantime, reputable advisors may offer differing interpretations. Patience, modeling, and informed decision-making are key. FINAL WORD: START PLANNING NOW. We’re still digesting many of the nuances, and awaiting more IRS guidance, but the direction is clear: this bill brings planning opportunities for businesses that are ready to act. Whether it’s accelerating deductions, evaluating capital investments, or adjusting your tax posture, now is the time to model your scenarios and make confident, informed decisions. Reach out to us today to start a conversation. Jennifer Nelson, CPA, MBA, is managing director of Tax Strategy & Solutions at Stambaugh Ness. Connect with her on LinkedIn.

JENNIFER NELSON, from page 3

INTEREST EXPENSE LIMITATION: BACK TO EBITDA. Under IRC section 163(j), businesses can once again calculate interest deductibility based on EBITDA, reversing the shift to EBIT. This is particularly meaningful for capital-intensive and highly leveraged businesses, increasing the amount of deductible interest. Note: Watch for special considerations if you have a C corp group election; certain international inclusions like GILTI and Subpart F are now excluded from the calculation. BONUS DEPRECIATION AND QUALIFIED PRODUCTION PROPERTY: ■ Bonus depreciation: Reinstated to 100 percent, but only for property acquired and placed in service after January 19, 2025. ■ Qualified production property (new section 168N): Allows 100 percent bonus depreciation for buildings used in qualified manufacturing and production industries, if they’re owner- used and construction begins after January 19, 2025, and before January 1, 2029, and placed in service through 2030. Cost segregation studies will be more relevant than ever as firms look to accelerate deductions and improve tax positioning. SECTION 179 EXPENSING: INCREASED LIMITS. The section 179 deduction limit increased to $2.5M, with a phase-out beginning at $4M. This allows for full expensing of a broader range of assets, including some building improvements not eligible under bonus depreciation. Strategically pairing this with cost segregation and bonus depreciation can significantly enhance tax outcomes. PTET DEDUCTION: STILL ON THE TABLE. Despite concerns, the pass-through entity tax deduction remains intact. This allows certain owners of pass-through entities to deduct state taxes at the entity level, potentially bypassing individual SALT deduction caps. This is still a valuable planning strategy, especially for those in high-tax states. OTHER NOTEWORTHY PROVISIONS. ■ Excess business losses for non-corporate taxpayers are now a permanent deferral item, converting to NOL carryforwards. ■ Qualified Opportunity Zones have been extended, with new 10-year rolling designations focused more heavily on rural and low-income communities. However, the original QOZ designations ending in 2026 remain unchanged, so planning around gain recognition remains critical. ■ Heavy reporting requirements: Starting in 2026, Qualified Opportunity Funds will face significantly more stringent reporting rules with potentially steep penalties for noncompliance. WHAT ELSE YOU NEED TO KNOW. While the headline provisions got much of the attention, several less-publicized but important tax changes are also part of this bill and they could directly impact your business or your personal return. 179D ENERGY EFFICIENCY DEDUCTION: NOT DEAD, YET. The 179D deduction for energy-efficient building construction or renovation is still available, but not permanently. Projects that begin construction after June 30, 2026, will no longer be eligible. So, if your project qualifies and construction starts before that cutoff, you can still leverage this powerful deduction. Timing matters, so be strategic about when construction begins.

THE ZWEIG LETTER JULY 14, 2025, ISSUE 1593

FROM THE FOUNDER

Going through a change program?

Show everyone it’s not business as usual and your firm is in a new era – you may find it a helpful tool to reinforce your change program.

S ometimes when companies evolve – they have management transitions – or a new strategic plan – or they just get fed up with mediocre financial results – their management seeks to reinforce that change. In my experience, that’s also a great time to change up the physical facilities. Just saying you have higher standards for excellence and expect different behaviors from your people is one thing, but showing that in the office itself is another.

Mark Zweig

The overarching message is “things are going to be different.” So what can you do? Here are some things I have seen AEC firms actually do with their facilities over the years when they find themselves implementing major changes: 1. Move people around. Get teams that need to work together more closely together physically. Move people who don’t get along with each other close to each other to improve their communications, or farther away from each other so you can minimize their interactions. Move the new boss into the old boss’s office. “Shuffle the cards,” one might say.

2. Add more natural light. I have always felt that natural light is important to one’s mental and physical health, and there’s plenty of evidence out there for any doubters that proves it. Maybe you need to rip out some partitions or change entire interior walls to glass. Maybe some doors need to go or be replaced with glass doors. Maybe it’s as simple as moving stuff such as furniture or cubicle partitions away from windows so they aren’t blocked, or making sure the blinds are open as long as the sun isn’t too hot. 3. Repaint and recarpet. Clean up and brighten up. That color scheme from the ‘90s with forest green accent walls has to go, and those bad

See MARK ZWEIG , page 6

THE ZWEIG LETTER JULY 14, 2025, ISSUE 1593

6. Add art to the space. When I was in the office daily for Zweig Group, we always had a rotating display of motorcycles in our lobby and/or outside my own personal office. How about hanging employee paintings all in one size? Portman Architects always had their founder’s sculptures displayed throughout their space. Years ago, I remember seeing employees’ children’s art displayed in HOK’s offices. Liven it up and change the art or at least some of it throughout the year. 7. Clean up the building exterior. It may be as simple as complaining to your landlord about the state of the parking lots or overgrown landscaping, or taking matters into your own hands and getting your employees together for a little exterior maintenance project. Look at the exterior lighting and signage, too. Fix what needs fixing to look like you have some higher standards. If you need money and have been in business for a long time, your bank will probably give you an amortizing loan to pay for these and other improvements you want to make. Ask them. Or maybe it’s time to renew your lease and your landlord will roll some or all of these costs into a new lease for you. If there’s a will, there’s a way. Make it happen. Show everyone it’s not business as usual any longer and you are in a new era. You may find it a helpful tool to reinforce your change program. Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

MARK ZWEIG, from page 5

orange oak built-ins have seen better days. And duct tape on the carpet covering cords? Come on. Paint everything that doesn’t move. Change the ceiling tiles – not just the water-spotted ones caused by leaks, but all of them. Get some new multi-colored industrial carpet tiles that aren’t worn and stained. 4. Improve the common areas. Make the conference rooms, lunch room/kitchen, and outdoor patio areas nicer. New furniture, appliances, window treatments, lighting – improve it all. Fix up the bathrooms. Nice bathrooms make a statement to both employees and outside visitors. “Here are some things I have seen AEC firms actually do with their facilities over the years when they find themselves implementing major changes.” 5. Bring in more electronic “life.” TVs are cheap these days! Hang them everywhere. Play an ever-running slideshow of past projects. Show pictures of employees with mini-bios. Show project site tours. Share performance metrics from the business. Turn on the business news channel. Share a “Welcome to So-and-So” graphic throughout the office to make key visitors feel special. Give the place some light and movement visually to wake everyone up.

INSPIRED INSIGHT

Growth and profitability drive value, and the most successful firms are using both acquisition and organic strategies to get there. It’s no longer either-or.

Stay informed. Get ahead. Explore industry insights, best practices, and benchmarks from Unanet’s comprehensive survey of over 300 leaders in AEC.

Download Unanet’s Inspire Report Today www.unanet.com/inspire

- Chad Clinehens, PE President & CEO, Zweig Group 2025 Inspire Report

THE ZWEIG LETTER JULY 14, 2025, ISSUE 1593

OPINION

From blueprints to job sites

Saying yes to new opportunities led one engineer from design to construction – and to a more fulfilling career path.

I f you had asked me when I was growing up – or even as I entered college – what my career would be, I would never have guessed I’d end up in engineering, let alone construction management. My path began in design engineering where I focused on the technical intricacies of water and wastewater infrastructure. Over the past few years, simply saying “yes” and staying open to new opportunities led me to the job site where I discovered a fast-paced, hands-on environment that sparked something new in me. What started as curiosity eventually evolved into a defining career shift – one that changed how I approach problem-solving, leadership, and long-term impacts.

Michelie Little

WHERE IT ALL BEGAN. My engineering career began with a design internship in the water and wastewater field while I was still completing my graduate degree. The moment I stepped into an office, everything changed for me. What I learned in the classroom is vastly different from the real-world experience that involves tangible impacts. During those early years, I built a strong foundation in technical design, using AutoCAD and Civil 3D to prepare construction blueprints for various water and wastewater infrastructure projects. This broadened my perspective and deepened

my understanding on how to read drawings and specifications – two contract documents that play a critical role even before construction begins on-site. My learning continued as I was introduced to more complex water treatment projects from the design side where I began to understand the necessary calculations before starting drawing markups for the future blueprints. Overall, gaining design experience proved essential before I transitioned into construction management.

See MICHELIE LITTLE, page 8

THE ZWEIG LETTER JULY 14, 2025, ISSUE 1593

The learning curve was steep (and still is), especially when it came to managing contractors and adapting to evolving site conditions. I quickly realized I didn’t just want to design solutions – I wanted to help build them. That shift transformed my perspective and ultimately ignited a new passion I plan to pursue long-term. EMBRACING CHANGE. By embracing change and stepping outside my comfort zone, I’ve learned that growth often comes when we least expect it. What once seemed like a small shift in my career has turned into a transformative experience that has redefined my skills, purpose, and vision for the future. To women considering a path in construction, know there is a place for you in this field – your voice matters, your perspective is powerful, and your journey can help open doors for others. As we build more resilient and sustainable infrastructure, let’s also build a stronger and more welcoming industry. Surround yourself with like-minded individuals who encourage your growth, challenge you to be better, and celebrate your wins. Community fuels progress, and together, we can shape the future of construction with greater impact and intention. Michelie Little is an assistant resident engineer at MKN. Connect with her on LinkedIn.

MICHELIE LITTLE , from page 7

MAKING THE SHIFT. To say the least, the shift was gradual. It started with a simple request to be part of a construction management project. You might be wondering why I made that request, and honestly, I don’t have a complete answer – other than I knew I wanted to try something different from design. The first CM project I worked on was for an advanced water treatment facility in San Diego County. Although the project was nearing its final stages, it was still fascinating to begin learning and understanding the differences between design and construction. If I had to pinpoint a pivotal moment that drew me more toward construction management, it would be when I worked on a different advanced water treatment facility project that was still in construction and just beginning the start-up and commissioning stages. I’ll never forget my first week on-site. The setting was completely different from the office – early morning on-site coordination meetings, cross-disciplinary teamwork, and constant, on-the-fly decision-making. While my design background gave me technical depth and an eye for detail, stepping into construction required an entirely new set of skills: field coordination, sequencing, and real-time problem-solving.

THE ZWEIG LETTER JULY 14, 2025, ISSUE 1593

OPINION

Despite recent success, AEC firms may need to navigate headwinds to mitigate risk and sustain growth and profitability. Insurers signal rising risk for AEC firms

A lthough architecture and engineering firms continued to reap the benefits of opportunities stemming from gradual economic growth, many of their professional liability insurers have lingering concerns about the effects of inflation on claim expenses; exposures related to higher risk projects and design disciplines, as well as emerging risks from artificial intelligence.

Jared Maxwell

As a result, 71 percent of insurers participating in the Ames & Gough 2025 survey of 17 leading insurance companies providing professional liability insurance to architects and engineers in the U.S. are planning rate increases; 24 percent plan to hold rates steady, and one insurer expects to reduce rates. Among insurers raising rates, all but one plan modest increases of up to 5 percent with the other planning an increase of 6-10 percent. Here are 10 key findings and insights from the survey that shed light on the insurers’ concerns and may be helpful to architecture and engineering firms as they develop or refine their business and risk management strategies during the remaining months of 2025 and beyond: 1. Economic and social inflation remain huge challenges. Besides higher costs for construction materials, supplies and labor as leading to higher

damages and settlements, most insurers pointed to social inflation, particularly jury awards and litigation trends, as contributing to higher claim payouts. One insurer estimated claim costs are rising 3 percent to 5 percent annually. 2. Insurers continue paying multimillion-dollar claims. Nearly all insurers surveyed reported paying multimillion-dollar claims in 2024 with 82 percent paying a claim between $1 million and $4.9 million and one insurer reported paying a claim that exceeded $20 million. 3. Insurers watching high-risk disciplines. When asked to rank the top three disciplines for claim severity, 70 percent of the insurers surveyed cited structural engineering; the same percentage identified architecture, followed by civil engineering (59 percent).

See JARED MAXWELL , page 10

THE ZWEIG LETTER JULY 14, 2025, ISSUE 1593

ON THE MOVE WILSON & COMPANY APPOINTS ANDY LEIFHEIT AS COO Wilson & Company, Inc. Engineers & Architects, a national leader in engineering and architecture with award-winning multidisciplinary projects, announced the appointment and promotion of Andy Leifheit as the company’s chief operating officer. Continuing to serve on the executive leadership team and working closely with the board of directors, Leifheit will oversee Wilson & Company’s operations, contribute to implementing the firm’s growth vision, promote its purpose and culture of Higher Relationships, and ensure the company continues to deliver excellent service to clients and communities. Leifheit’s leadership will play a pivotal role in navigating Wilson & Company’s path toward its ambitious growth objectives. His vision, experience, and dedication to the company’s mission will

be instrumental in positioning the firm for sustained success and growth far beyond the initial $250 million milestone. “We are confident that Andy’s leadership and vision will help Wilson & Company thrive in this next phase of our transformation,” said Jim Brady, PE, president and CEO of Wilson & Company. “His ability to promote our culture of collaboration and dedication to excellence will be critical as we work toward achieving our long-term goals.” Leifheit has been with Wilson & Company since 2007 and has more than 27 years of experience in the engineering and architecture industry and has demonstrated a strong ability to drive organizational growth. Leifheit has held several leadership roles at Wilson & Company. In 2018, he took on the role of rail division manager, overseeing the rail services market and UIC/Field Services

Program, before stepping into his most recent position as senior vice president of Private Infrastructure following year one of Wilson & Company’s organizational restructuring. “A strong commitment to our people and culture drives Wilson & Company’s growth and success. I’m honored to step into the role of COO and excited to continue working alongside an exceptional leadership team. Together, we will continue our mission to deliver innovative solutions to our clients while fostering collaboration, operational excellence, and a culture defined by Higher Relationships,” said Leifheit. Wilson & Company has brought more than 700 people together in 15 offices over nine states to build Higher Relationships through discipline, intensity, collaboration, shared ownership, and solutions.

presented by AI, they need to be vigilant in their assessment of related issues, such as algorithmic errors or unintended design flaws, and implement robust safeguards and quality control measures. 8. State-specific claim trends and risks raise concerns. Some insurers surveyed pointed to what they consider bothersome trends in certain states with a few concerned about Florida, Texas, Colorado, Pennsylvania, New York, and Washington for having adverse loss experience. Others singled out California for elevated risk due to climate and topography changes. 9. Claim complexity and costs, evolving risk landscape, competition, and sustainable pricing among top insurer concerns. While claim complexity and severity continue to be key concerns of insurers, some insurers also had concerns about the combined impact of a potential recession, higher construction costs, and rising claim levels on their books of business along with the challenges associated with balancing competitive pricing of their professional liability coverage against heightened risks. 10. Growing worries over rising climate exposures. The climate-related disasters in 2024 and 2025 have elevated concerns among insurers about whether architecture and engineering firms can adapt to evolving weather conditions in anticipation of potential adjustments to building codes and standards. To obtain a complimentary copy of the Ames & Gough Survey, PLI Market 2025: A/E Firms See More Growth Amid Heightened Risks and Rising Costs , email info@amesgough.com. Jared Maxwell is vice president and partner at Ames & Gough. He can be reached at jmaxwell@amesgough.com.

JARED MAXWELL, from page 9

4. Despite stable capacity obtaining higher professional liability coverage limits comes with added scrutiny. Although some insurers now appear willing to offer more capacity, including limits of $20 million and above, they typically apply greater underwriting scrutiny to these requests. Thus, design firms might try negotiating with owners on whether higher limits are necessary; if so, they might explore alternative structures, such as specific additional limits endorsements/project excess or layered programs. 5. Most insurers target architecture and engineering firms with poor loss experience for rate increases. Two-thirds of the insurers surveyed plan to target rate increases on accounts with adverse loss experience; one in three plan rate increases across their entire books, reflecting widening insurer concerns over rate adequacy over the long term. 6. Insurers wary over heightened design firm M&A activity. Insurers are watching the rise in mergers and acquisitions among design firms – especially deals involving private equity firms, which they fear may hasten the speed of the transactions and cause principals to overlook careful integration of risk management. Architecture and engineering firms making these deals should review the target’s current claims, recent loss history, and structure the combined entity’s risk management to address any new or heightened exposures. 7. AI-driven applications bring new risks. As more design firms integrate AI into their processes, insurers are carefully monitoring these developments and their potential effects on claim activity. As architecture and engineering firms look to leverage new opportunities

THE ZWEIG LETTER JULY 14, 2025, ISSUE 1593

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