For the first time in FMI’s compensation study, more than half of architecture, engineering and construction firms offer long-term incentives. That line held between 35% and 40% for years. It crossed 50% in the 2026 edition, released September 2, and it’s the most useful number in the report.
Base pay has stopped moving
The study covers 218 companies across 40 states, with responses collected in February 2026. More than two-thirds of respondents are closely held, and average annual revenue is about $1 billion. FMI runs it every three years.
Average recent base pay increase came in at 4%, and the average 2026 increase budget at 4.3%. Ninety-nine percent of respondents plan to provide raises this year. That’s a market settling into a steady state after four years of catch-up, and it’s the backdrop for everything else in the report.
The structural findings are less flattering. Seventy-eight percent of firms have established formal base pay ranges, but only 45% have a formal compensation philosophy. Most firms, in other words, have built the mechanics of a comp program without settling the strategy underneath it: ranges exist, but nobody has decided what the ranges are supposed to accomplish.
Incentives are where the competition moved
Ninety-four percent of firms offer short-term incentive programs and 75% tie them to corporate strategy or the business plan. The LTI shift is the newer development. Priya Kapila, the FMI partner who heads its compensation practice, frames it around retaining experienced leaders and other high-impact employees, which is the standard explanation and probably the right one.
The read that follows is straightforward. If everyone is budgeting roughly 4%, base pay stops being a differentiator, and the fight moves to equity, phantom equity and deferred plans. Closely held firms have a structural advantage there, and two-thirds of this sample is closely held.
The travel gap is an exposure
Fifty-eight percent of firms have employees required to travel. Only 28% have formal written travel or assignment benefit policies. That’s a 30-point gap, and it lands squarely on the firms staffing out-of-market data center, transmission and industrial work, which is where a lot of current volume sits.
Anyone sending crews or project staff to a remote megaproject is negotiating per diem, rotation and assignment premiums case by case, which produces inconsistency, resentment and eventually a retention problem. It also makes those jobs harder to price. A 285-mile transmission line across the Nevada desert or a campus program like URI’s Flagg Road and Graduate Village student housing, running against two other major capital efforts on the same campus, both pull staff away from home markets for years.
Two caveats worth stating
Every figure here is self-reported survey data from 218 FMI respondents, and FMI sells compensation consulting, so the study is a marketing asset as well as research. Attribute the numbers rather than stating them as industry fact.
The bigger caveat is timing. Responses were collected in February 2026 and published seven months later. The 4.3% budget figure predates this summer’s softening, and the AGC and NCCER workforce survey released the following day found 37% of contractors had cut headcount by at least 5%. A budget set in February is not a budget being spent in September. The study is available from FMI.