Revenue leakage is one of those issues that can quietly chip away at profitability, often without anyone noticing until it’s too late. For architecture and engineering firms, this usually shows up as scope creep, underquoting, or team members doing extra work without charging for it.
In this interview, Josh Stone, engineer, coach & head of Ignite Coaching, and member of the Blueprint Collective, breaks down what causes revenue leakage, how to spot it early, and the habits successful firms build to protect their margins and support their teams.
What exactly is revenue leakage, and why does it matter?
JS: Revenue leakage is when your team delivers extra work without charging for it. That could be a small design tweak or an entire added scope. It usually happens when changes aren’t tracked, proposals are underquoted, or the team says yes without raising it as a variation. The result is lost profit and increased pressure on your team.
What warning signs should firms look out for?
JS: A stressed or overworked team is often the first clue. If a project suddenly feels out of control, it’s worth asking why. You might find that a client made a request directly to a team member and no one flagged it. These seemingly small requests can quietly derail your budget and schedule.
Is revenue leakage always the client’s fault?
JS: Not at all. Most clients don’t realise they’re asking for more than what was agreed. They’re just trying to move things along. But if your team doesn’t know how to respond or feels uncomfortable pushing back, your firm ends up covering the cost.
How do people-pleasing habits contribute to the problem?
JS: A lot of technical staff want to be helpful. They’re focused on doing great work, not having tough conversations. That’s why firms need to give their teams scripts and support. Something as simple as, “That sounds like a change in scope. I’ll check with my PM,” can go a long way in protecting time and budget.
How can firms empower staff to manage scope conversations confidently?
JS: Start by making sure everyone understands the agreed scope. Use kickoff meetings and delivery check-ins to keep it clear. Then put systems in place for flagging changes. Your team doesn’t need to say no. They just need a process that allows them to escalate it to the right person.
Where does revenue leakage usually happen?
JS: I usually see three main areas:
- Mid-project scope creep: When clients ask for more work and it’s not raised as a variation.
- Proposal underquoting: When firms keep fees low to stay competitive, even as scope expands.
- Lack of oversight: When team members do extra work without the business owner or PM knowing.
What should firms do when they’re tempted to underquote just to win work?
JS: It’s risky. Even if you win the job, you’re starting at a loss. If you believe in the value you bring, price accordingly. Clients respect clarity and confidence. They will pay more for firms that back themselves. Discounting can be strategic, but it should never be the default.
Is there ever a good reason to reduce fees?
JS: Yes, but only when it’s intentional. For example, you might reduce fees on the first stage of a legacy project to get your foot in the door, but plan to make it up later. It has to be a decision based on long-term strategy, not fear of losing the job.
What simple habits help firms catch and prevent leakage?
JS: There are four things I recommend:
- Track scope creep consistently and talk about it openly as a team.
- Audit timesheets every week so you know where time is going.
- Review project financials weekly including fees, hours, WIP, and invoicing.
- Address people-pleasing tendencies and support your team to speak up early.
What’s one first step firms can take today?
JS: Start with weekly project reviews. Look at where time is being spent and ask your team why. If you catch scope changes early, you can still have a fair, timely conversation with the client. Wait too long, and those conversations get harder and more expensive.
Final Thoughts
Revenue leakage doesn’t just affect profits. It creates stress, strains client relationships, and wears down teams. But it’s avoidable. With strong internal systems, better visibility, and a culture that supports confident, respectful conversations, firms can take control of their scope and protect their bottom line.
Grab Josh Stone’s New Book: The Profitable Engineering Consultant
Josh’s new book, The Profitable Engineering Consultant, is a field-tested framework that helps engineering consultancy owners go from a Technician Business Owner to a Conductor Business Owner and right on up to the ultimate: a Lifestyle Business Owner.
Through the Boardroom Coaching Program, Josh has helped 116+ consultants turn every $1 they spend with me into $12, all while creating a business that runs without them. Learn more and order your own copy here.
About Josh Stone
Josh is a business coach, engineer and former consultancy owner who has firsthand experience in what it takes to grow a business – because he’s done it himself. He spent nearly a decade as a director and shareholder of a $3M engineering consultancy that grew to a $30M engineering, town planning, surveying, and architecture consultancy with multiple offices along Australia’s east coast.
Over this period, Josh learnt what to do (and what not to do) to grow a successful, profitable and sustainable consultancy.
After selling his shareholding and exiting the business, Josh founded his Boardroom coaching program and now works exclusively with engineering, town planning, surveying, and architecture consultancy owners, helping them to grow to $10M and beyond.
About Ignite Coaching
Ignite Coaching, led by Josh Stone, is a coaching and advisory business that helps engineering, town planning, surveying and architecture consultancies increase revenue, make more profit and run more efficient and sustainable businesses.
Josh is a business coach, engineer and former director and shareholder of a $3M engineering consultancy that grew to a $30M engineering, town planning, surveying, and architecture consultancy with multiple offices along Australia’s east coast.
At Ignite Coaching, we provide a step-by-step blueprint that will help you build a $10M+ per year consultancy that is profitable, successful and a business that you can be proud of.
No matter where you’re at on your journey, we have a pathway and proven strategies to get you to that next level.
- If you’re under $1M per year, we will get you to that illusive $1M run rate.
- If you’re between $1M and $3M, we’ll get you to $3M+.
- If you’re between $3M and $5M, we’ve got a specific plan to get you to $5M.
- And if you’re already at $5M+ per year, we’ve got strategies and a pathway to help you grow and scale to $10M per year and beyond.
We work with our clients to ensure you have clarity and focus on the high priority activities that will make the biggest difference & show you a proven pathway that actually works to help you build your business with confidence.
We work specifically with our clients around 3 core areas:
- More revenue: Winning work, business development & deeper client relationships to have a regular stream of high quality clients and work coming through the door.
- More profit: Team performance, project performance as well as leadership skills to motivate, influence and inspire to ensure a highly profitable team and business.
- More time: Leadership growth, effective delegation and freeing up more time to focus on the high-growth activities that move the needle the most and make the biggest difference.
The Blueprint Collective: A Community for A&E Innovators
Josh Stone and this article are part of the Blueprint Collective, a free, members-only content program that highlights top architecture and engineering firms. We do all the work, you get all the credit.
Each month, we interview you for 30 minutes, then write, design, and promote custom content about your firm. You’ll get beautifully branded materials, backlinks, and social promotion, all with full approval rights. It’s free PR, real thought leadership, and zero lift on your part. Learn how to join the Blueprint Collective here.
