PORTFOLIO APPROACH TO STRATEGIC MANAGEMENT OF AE FIRMS

Architecture/engineering (A/E) firms are sometimes criticized for a lack of long-term strategic planning-for reacting to short-term opportunities rather than proactively formulating and implementing long-term business plans. However, given the project orientation of the architecture/engineering/construction (A/E/C) industry, the volatility of project markets, and the relatively low capitalization of many A/E firms, such a short-term approach is somewhat logical. Nevertheless, it appears that consideration by A/E firms of the concepts of strategic management should be worthwhile. This paper analyzes the design segment of the A/E/C industry within the context of a framework based on these concepts, and suggests an approach to business strategies for A/E firms that incorporates the principles of portfolio management.