The $1.1 Trillion Question: Why General Contractors Are Buying Architecture Firms (And What It Means If You're Not at the Table)

By 2028, nearly half of all U.S. construction spending will flow through design-build projects. The contractors positioning themselves to capture that $1.1 trillion opportunity aren't waiting for architects to return their calls. They're buying the architecture firms outright.

When Clayco acquired Lamar Johnson Collaborative in 2018, it wasn't just adding another service line—it was signaling a fundamental shift in how buildings get designed and built in America. Now, with 4,000+ engineers on staff at Kiewit and integrated design arms at firms like Haskell, Gray, and Ryan Companies, the question isn't whether contractors will dominate design-build. It's whether independent architecture firms can survive the consolidation.

This isn't speculation. It's already happening. And if you're a general contractor still operating under traditional design-bid-build assumptions, or an architecture firm principal wondering about your next five years, the decisions being made right now will determine which side of this transformation you land on.

Here's what's driving the shift, who's leading it, and what it means for how projects get delivered.

Key Takeaways

• Market Shift: Design-build delivery is projected to account for 47% of all U.S. construction spending by 2028.
• Strategic Integration: Top contractors are moving from "teaming" to "owning" by acquiring architecture firms to control risk, schedules, and profitability.
• Legal Hurdles: State-specific licensing laws often require architecture firms to remain legally distinct entities with professional ownership, despite being owned by a parent GC.
• Success Factors: Effective integration requires maintaining the design firm's culture and brand while establishing clear boundaries for professional judgment.
• Industry Choice: Independent firms must specialize or adapt to design-build to remain competitive against integrated "powerhouses."

The Market Forces Reshaping Design Delivery

Design-Build Is Eating Traditional Delivery

The numbers are clear: design-build delivery is projected to exceed 47% of U.S. construction spending by 2028, growing at a 2.9% compound annual rate. This isn't a niche delivery method anymore—it's becoming the default.

Owners are choosing design-build for reasons that matter: single-point accountability, compressed schedules, and better management of supply chain risk. When one entity controls both design and construction, interface problems get resolved faster, prefabrication becomes easier to coordinate, and cost certainty arrives earlier in the process.

The sectors driving this growth—manufacturing, highway and street construction, education—are exactly where contractors with integrated design capabilities are winning the largest contracts. If you're a GC competing for these projects without in-house design, you're starting every pursuit at a disadvantage.

Legislative Tailwinds Are Accelerating Adoption

Design-build is now available in virtually every state, with recent expansions in Illinois, Missouri, Nebraska, and New York. Progressive design-build—where design and construction overlap in phases—is growing rapidly in public markets, creating even more opportunities for integrated teams.

This legislative shift isn't just enabling design-build; it's creating competitive pressure. Owners who can now choose design-build delivery are asking: why would we hire separate teams when we can get both under one contract?

The Economics of Control

For contractors, the math is straightforward: controlling design means controlling risk, schedule, and profitability.

Early involvement in design allows GCs to influence constructability decisions before they become change orders. Prefabrication strategies can be embedded from the start rather than value-engineered in later. And when design and construction operate from shared cost models and schedules, the entire project moves faster.

But there's another factor: competitive positioning. The ENR Top 100 Design-Build lists are increasingly dominated by contractors with integrated design capabilities. If you're not on that list, you're not competing for the largest opportunities in the market.

Strategy One: Build Design Capabilities Internally

Some contractors are choosing to grow design teams organically, hiring architects and engineers directly rather than acquiring firms. This approach takes longer but offers more control over culture, systems, and integration.

Kiewit: The 4,000-Person Design Powerhouse

Kiewit has built one of the largest in-house engineering and design operations in the industry—more than 4,000 staff focused on industrial, infrastructure, and mission-critical buildings. Rather than acquiring firms, Kiewit has been actively recruiting architects and engineers to expand its EPC (engineering, procurement, construction) and design-build capabilities.

The advantage: complete control over how design integrates with construction operations, procurement, and self-perform work. The challenge: building this capability takes years and requires sustained investment in talent, technology, and systems.

Gray AES: Consolidating Internal Design Under One Roof

In 2025, Gray Construction consolidated its architecture, engineering, and automation affiliates into a single professional-services unit called Gray AES. This wasn't an acquisition—it was an internal reorganization to unify design capabilities that had grown across multiple entities.

The result is a streamlined structure where architecture, engineering, and automation work directly with Gray's construction operations, creating tighter coordination and faster decision-making on integrated projects.

Ryan Companies: The Hybrid Model

Ryan Companies operates Ryan A+E as a wholly owned subsidiary, maintaining significant in-house design capacity while still partnering with external architects when projects require specialized expertise.

This hybrid approach gives Ryan the flexibility to control design on projects where integration matters most—particularly in their developer-led work—while still accessing specialized capabilities when needed.

The Beck Group: 25 Years of Integration

The Beck Group's integrated model dates back to 1999, when it merged with a 40-person architecture firm. Twenty-five years later, Beck operates as a fully integrated design-build firm across multiple offices, with design and construction teams working from a shared culture and methodology.

Beck's longevity in this model demonstrates that integration can work—but it also highlights how long it takes to build and refine these capabilities internally.

When does "build" make sense? If you have the timeline, capital, and leadership commitment to invest in talent and systems over multiple years. If you're willing to compete for design talent against both architecture firms and other contractors. And if you believe your competitive advantage comes from controlling how design and construction integrate rather than from acquiring established client relationships or specialized expertise.

Strategy Two: Acquire Architecture Firms

Other contractors are choosing speed over control, acquiring established architecture firms to gain immediate design capability, client relationships, and talent.

Clayco: Building a 240-Person Design Platform Through Acquisition

Clayco's design integration strategy unfolded in stages. In 2018, the firm acquired Lamar Johnson Collaborative, a respected St. Louis-based architecture firm. That same year, Forum Studio and Bates merged to form BatesForum. In 2019, Clayco combined LJC and BatesForum into a single 240+ person integrated design firm.

The strategic rationale was clear: embed design within Clayco's development, design, construction, and self-perform platform. By controlling design, Clayco could move faster on its own development projects while also offering fully integrated design-build services to clients.

The result is one of the largest contractor-owned architecture operations in the U.S., with the scale and capability to compete on major projects across multiple sectors.

Haskell: Acquiring Healthcare Design Expertise

In 2014, Haskell acquired FreemanWhite, a healthcare-focused architecture firm, establishing Charlotte as a center of excellence for healthcare design, planning, and construction.

This acquisition gave Haskell immediate credibility and capability in a specialized, high-value market. Rather than trying to build healthcare design expertise from scratch, Haskell bought an established firm with client relationships, project experience, and specialized knowledge.

Notably, Haskell retained the FreemanWhite brand initially, recognizing that architecture firm identity and client relationships matter—particularly in specialized markets where reputation and expertise are closely tied to firm names and principals.

Skender: Design Acquisition Aligned with Manufacturing Strategy

In 2018, Skender acquired Ingenious Architecture as part of a broader strategy to integrate design with modular manufacturing. The logic was compelling: if you control both design and manufacturing, you can optimize buildings for off-site fabrication from the earliest stages.

But this case also offers a cautionary lesson. When Skender closed its manufacturing unit during COVID in 2020, the strategic rationale for the design acquisition shifted. Integration strategies that depend on specific business models or market conditions can become liabilities when those conditions change.

Historical Precedent: Balfour Beatty and Parsons Brinckerhoff

In 2009, Balfour Beatty acquired Parsons Brinckerhoff (now WSP) as part of an "across-the-lifecycle" business strategy, aiming to control projects from planning and design through construction and operations.

Five years later, Balfour Beatty divested PB, signaling that even large-scale integration strategies can be revisited when they don't deliver expected returns or when market conditions change.

The lesson: acquisition is not a one-way door. Integration strategies can be unwound—but usually at significant cost and disruption.

When does "buy" make sense? If you need design capability quickly to compete for near-term opportunities. If you're entering a specialized market (healthcare, education, industrial) where established expertise and client relationships matter. If you're acquiring talent that would be difficult to recruit individually. And if you have a clear plan for how the acquired firm will integrate with your construction operations without losing the capabilities that made it valuable in the first place.

The Legal and Licensing Complexity No One Talks About

Here's the problem: in most states, architecture firms must be owned and controlled by licensed design professionals. This creates immediate structural challenges when a contractor wants to acquire an architecture firm.

The State-by-State Patchwork

Architecture firm ownership laws vary significantly by state. In Pennsylvania, two-thirds of directors and voting stock must be owned by licensed design professionals, with at least one-third held by architects. New York and California have similar entity and ownership controls. Most states also require that licensed architects maintain "responsible control" over design work.

This means you can't simply buy an architecture firm the way you'd acquire a subcontractor or a supplier. The legal structure has to preserve professional control while still giving the contractor the operational and financial integration it's seeking.

Structural Solutions

Most contractor acquisitions of architecture firms use one of several structures:

• Professional corporations or PLLCs as separate subsidiaries. The architecture firm remains a legally distinct entity owned by licensed professionals, but operates as a subsidiary of the contractor's parent company. This preserves compliance with ownership laws while allowing operational integration.
• Licensed architects in leadership positions. Even when a contractor owns the parent company, licensed architects must remain in control of design decisions and professional practice. This isn't just a legal requirement—it's essential for maintaining professional liability insurance and meeting state board requirements.
• Compliance frameworks for multi-state operations. Contractors operating nationally must navigate different ownership rules in every state where they want to offer integrated design-build services. This often means maintaining multiple legal entities and ensuring that each complies with local professional practice laws.

Implications for Deal Structure

These legal requirements explain why many acquisitions maintain separate brands, separate legal entities, and separate leadership structures even after the deal closes. It's not just about preserving culture or client relationships—it's about maintaining compliance with professional practice laws.

Insurance and liability considerations add another layer of complexity. Architecture firms carry professional liability insurance that covers design errors and omissions. When a contractor acquires an architecture firm, the insurance structure has to account for how risk flows between the design entity and the construction entity—and how claims will be handled when both are under common ownership.

The bottom line: If you're a contractor considering an architecture acquisition, budget for significant legal and structural complexity. If you're an architecture firm considering being acquired, understand that you'll likely remain a separate legal entity with licensed professionals in control—even if you're operating as part of a larger contractor-led organization.

The Risks and Cautionary Tales

Not every integration strategy succeeds. Some fail spectacularly.

Katerra: The Cautionary Tale of Over-Integration

Katerra's collapse in 2021 stands as the most visible failure of vertical integration in recent AEC history. The company pursued an aggressive acquisition strategy, buying architecture firms, engineering firms, and manufacturing facilities in an attempt to control the entire building lifecycle.

The model failed for multiple reasons: overextension, market timing, operational complexity, and a fundamental misunderstanding of how design, manufacturing, and construction integrate in practice. Katerra's failure doesn't mean integration is impossible—but it does highlight the risks of moving too fast, acquiring too broadly, and underestimating the cultural and operational challenges of combining design and construction organizations.

Common Risk Factors

Cultural clash. Design and construction organizations operate differently. Architects are trained to explore options, iterate, and advocate for design quality. Contractors are trained to execute, manage risk, and deliver on schedule and budget. When these cultures collide without careful management, the result is often conflict, talent attrition, and failed integration.

• Cultural Clash: Design and construction organizations operate with different priorities (iteration vs. execution).
• Governance Failures: Risk of losing professional standing if contractors override design decisions for commercial reasons.
• Market Timing: High overhead from acquisitions during market peaks can become a liability during downturns.
• Talent Attrition: Loss of key principals and senior designers who hold critical client relationships.

Governance and professional-practice structure failures. If the legal structure doesn't preserve professional control, or if contractors try to override design decisions for commercial reasons, the architecture firm loses its professional standing—and often its best talent.

Market timing and overextension. Acquiring design capability during a market peak can leave contractors with expensive overhead when work slows. Skender's manufacturing closure during COVID is an example of how quickly strategic rationale can evaporate when market conditions shift.

Talent retention post-acquisition. Architecture firm principals and senior designers often leave after acquisitions, taking client relationships and expertise with them. If the acquisition was primarily about talent and relationships, losing key people can destroy the deal's value.

Risk Mitigation Strategies

Successful integrations tend to share common characteristics:

• Maintaining design firm brand and culture. Haskell's retention of the FreemanWhite brand (initially) and Clayco's preservation of LJC's identity signal respect for the architecture firm's reputation and client relationships.
• Clear professional-practice boundaries. Successful integrations establish clear lines between design decisions (controlled by licensed architects) and construction decisions (controlled by the contractor), with governance structures that prevent commercial pressure from overriding professional judgment.
• Phased integration approaches. Rather than forcing immediate operational integration, successful acquirers often allow architecture firms to continue operating semi-independently while gradually aligning systems, processes, and culture over time.

What This Means for the AEC Industry

For Independent Architecture Firms

If you're running an independent architecture firm, this trend creates both pressure and opportunity.

The pressure is real. You're competing against integrated design-builders who can offer owners single-point accountability, compressed schedules, and early cost certainty. On large design-build projects, you're often relegated to a subconsultant role under a contractor-led team, with less control over scope, fee, and design decisions.

But there are paths forward. Some firms are positioning themselves as specialized experts in markets where integration is harder (complex institutional work, historic preservation, high-design commercial). Others are pursuing their own design-build capabilities, becoming architect-led design-builders who compete directly with contractor-led teams.

And some firms are positioning themselves as acquisition targets, recognizing that if consolidation is inevitable, being acquired by the right contractor at the right valuation might be the best exit strategy available.

The question you need to answer: Are you building a firm that can compete independently in a market increasingly dominated by integrated design-builders? Or are you building a firm that would be valuable to a contractor looking to acquire design capability?

For General Contractors

If you're a GC without integrated design capability, you're facing a strategic decision: build, buy, partner, or accept that you'll be competing at a disadvantage on design-build work.

Building takes time and capital. You need to recruit design talent, invest in technology and systems, and develop the cultural and operational frameworks that allow design and construction to work together effectively. This is a multi-year commitment.

Buying is faster but riskier. You can acquire immediate capability, but you also inherit integration challenges, cultural differences, and legal complexity. And if you don't retain the talent and client relationships you acquired, you've bought an expensive overhead structure without the value you paid for.

Partnering is the status quo—but it's losing ground. Traditional teaming arrangements with architecture firms still work for many projects, but they don't offer the competitive advantages of true integration: early cost certainty, optimized constructability, and the ability to move faster than competitors who have to coordinate across separate contracts.

The question you need to answer: Is design-build a core part of your competitive strategy, or are you content to compete primarily in traditional delivery? If it's core, you need a plan for how you'll acquire or build design capability. If it's not, you need to be clear-eyed about which markets and project types you're willing to cede to integrated competitors.

For Owners

If you're an owner procuring design and construction services, this trend changes your options and your risks.

The upside is clear: integrated design-build teams can move faster, provide earlier cost certainty, and reduce interface risk between design and construction. When it works well, you get a better building, delivered faster, with fewer surprises.

But there are trade-offs. When the same entity controls both design and construction, you lose the traditional checks and balances of having an architect who represents your interests during construction. Design advocacy—the architect's role in ensuring that design intent is preserved during construction—can be compromised when the architect works for the contractor.

The AIA Trust has documented concerns about "flow-down," "skip-over," and insurance gaps in contractor-led design-build, where architects working under contractors may face different contractual risk allocations and potentially limited roles during construction compared to traditional delivery.

The question you need to answer: Are you comfortable with a single entity controlling both design and construction? Do you have the internal expertise to manage an integrated design-build team effectively? And are you clear about what you're gaining and what you're giving up compared to traditional delivery?

For Architects Working Under Contractor Ownership

If you're an architect working for a contractor-owned firm, your professional experience will be different from working at an independent architecture firm.

The work can be rewarding. You're involved earlier in projects, you have direct access to construction expertise and cost information, and you see your designs move from concept to completion faster than in traditional delivery.

But the trade-offs are real. You may have less control over design decisions when they conflict with construction cost or schedule. Your role during construction may be more limited than in traditional delivery, where architects provide construction administration services directly to the owner. And your career path may be shaped by the contractor's business priorities rather than by traditional architecture firm advancement.

The question you need to answer: Does the integrated design-build environment align with your professional goals and values? Are you comfortable with the trade-offs between design advocacy and construction efficiency? And do you understand how your professional liability and career trajectory differ from architects in independent practice?

Looking Ahead: 2026-2028 and Beyond

The trajectory is clear: design-build will exceed 47% of construction spending by 2028, progressive design-build will continue expanding in public markets, and contractors with integrated design capabilities will capture an increasing share of the largest projects.

Expect continued acquisition activity. Healthcare, water infrastructure, industrial/manufacturing, and mission-critical facilities are likely targets for contractors seeking specialized design expertise. Firms with strong client relationships and specialized capabilities in these sectors will be attractive acquisition targets.

Expect continued internal investment. Contractors who choose to build rather than buy will continue recruiting architects and engineers, investing in design technology, and developing the systems and culture needed to integrate design and construction effectively.

Expect prefabrication and early procurement to accelerate integration. As more projects incorporate off-site manufacturing and early equipment procurement, the advantages of controlling both design and construction will become even more pronounced. Contractors who can optimize designs for prefabrication from the earliest stages will have significant competitive advantages.

Expect state licensing laws to evolve—slowly. Some states may relax ownership restrictions on architecture firms, making integration easier. But professional associations and state boards are likely to resist changes that could compromise professional independence and design advocacy.

Open Questions

Will independent architecture firms consolidate among themselves as a counter-strategy? If small and mid-size firms can't compete individually against integrated design-builders, will they merge to create larger, more capable independent firms?

How will professional associations respond? The AIA, DBIA, and AGC all have stakes in how design and construction integrate. Will they develop new practice standards, insurance products, or delivery frameworks that address the challenges of contractor-owned design?

What role will technology play? Real-time collaboration tools, integrated cost and schedule modeling, and AI-assisted design are changing how teams work together. Will technology make integration easier—or will it enable new forms of collaboration that don't require common ownership?

The Bottom Line

The AEC industry is in the middle of a fundamental restructuring. Contractors are acquiring architecture firms and building massive in-house design teams because the market is rewarding integration. Design-build is becoming the default delivery method for large projects, and owners are choosing teams that can provide single-point accountability from concept through completion.

If you're a general contractor, the question isn't whether to integrate design—it's how and when. Build, buy, or partner, but understand that standing still means ceding market share to competitors who are moving faster.

If you're an architecture firm, the question is whether you can compete independently in a market increasingly dominated by integrated design-builders—or whether your best path forward is positioning yourself as an attractive acquisition target or pursuing your own design-build capabilities.

And if you're an owner, the question is whether you're prepared to manage integrated design-build teams effectively, understanding both the advantages and the trade-offs compared to traditional delivery.

The $1.1 trillion design-build market through 2028 will be captured by teams that can design and build faster, with better cost certainty and fewer interface problems. The question is whether you'll be at the table when those decisions get made—or whether you'll be watching from the outside as others reshape the industry.

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