Exploring Alternative Revenue Models for Construction Consulting Firms in the Digital Era

Abbas Tafti (), Marcus Sandberg and Matts Andersson
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Abbas Tafti: WSP, Smedjegatan 24, 972 31 Luleå, Sweden
Marcus Sandberg: Department of Civil, Environmental and Natural Resources Engineering, Luleå University of Technology, 971 87 Luleå, Sweden
Matts Andersson: WSP Sverige AB, Arenavägen 7, 121 88 Stockholm, Sweden

Sustainability, 2024, vol. 16, issue 21, 1-29

Abstract: The AEC industry, including construction consulting, is experiencing digitalization through technologies like Building Information Modeling (BIM), impacting firms’ business models. The traditional hourly-based model does not align with shortened project timelines driven by digitalization, design automation, and product-based approaches. This study uses a case study approach and explores and evaluates four selected alternative revenue models (freemium, subscription, out-come-based, and performance-based) for value creation using a digital tool developed by the consulting firm. The freemium model enhances market reach but requires a high conversion rate. The subscription model offers steady recurring revenue and supports client relationships. Out-come-based and performance-based models link payments to client outcomes and performance metrics, fostering efficiency and competitive advantages. The study identified multiple target markets for this tool and emphasized the importance of a portfolio revenue model to meet specific client needs in the digital era. Implementing alternative revenue models aids return on investments and avoids the digitalization paradox. Construction consulting firms must adeptly manage these models’ complexities to address diverse client needs and leverage digital transformation opportunities.

Keywords: construction consulting industry; alternative revenue models; product-based approach; digitalization; business model; AEC industry (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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