Architecture / Engineering R&D Tax Credits

The industry of Architecture and Engineering (A&E), as well as the straight engineering field, have long been recognized as R&D tax credit generators. All engineering trades, particularly civil and structural, bridge and highway design and development, as well as building design and development are characterized by technical ambiguity, which is suggestive of research activities. Each design is very complicated and seldom "cookie-cutter" in nature, and this applies to both new construction and existing structures. Design reviews, the creation of new processes, the experimentation with materials, as well as the examination of alternatives, are all examples of activities that fall under the qualified category.

Qualified operations are often carried out by estimators, engineers, project managers, and technicians, among other professionals. Estimators are responsible for preparing bids and proposals. A large number of technical features of a work are recognized at this point. Engineers with extensive training and experience are frequently employed as estimators. Using drawings that estimators carefully study and assess about information collected via research, bids are prepared and submitted. Due to a large number of unknowns, accurate equipment, material, and labor cost estimates are essential. It is up to these experts to generate hypothetical performance standards for the earliest phase of a project. They must have the knowledge and ability set to anticipate these needs while also considering financial restrictions. Surveys are frequently carried out by engineers to identify reference points, grades, and elevations.

Additional operations may include soil testing for structural as well as foundation options, testing of novel construction materials, risk analysis, and the development of new systems using design software. A large portion of the project manager's work is spent in the field, diagnosing problems and arranging solutions using a variety of different methods and approaches, such as land, grade, and soil alterations. Workers in this field are responsible for working in collaboration with a variety of engineers and project managers. Their responsibilities include soil analysis, software design and modeling, and the preparation of construction contract design documentation.

The costs connected with employing outside consultants to execute these activities are frequently included in qualified research expenses (QREs), in addition to the costs associated with internal labor. Often, engineering organizations underestimate the amount of research and development expenditures they incur, as well as the amount of R&D tax credit they are entitled to. The kind of activities that might qualify for the credit are significantly larger in scope and character than what is generally thought of as qualifying research and development, and they are also much more diverse.

There are various stages to a typical A&E project. Research activities are often more prominent in the early stages of a project, although they can also occur later on. The following are typical Architecture and Engineering development stages:

PreDesign – Bidding

  • Preliminary design
  • Initial concept brainstorming
  • Few QREs

Schematic Design

  • Preliminary design/concept demonstration
  • Initial development of the concept, solution/ideas/hypotheses evaluation
  • Budgetary considerations
  • Significant QREs

Design Development

  • Design is more detailed
  • Proving concepts through mockups
  • Significant QREs

Contract (Construction) Management

  • Few QREs

Negotiation Phase

  • No QREs

Construction Design

  • Few QREs
Qualified Activities for Architecture

Schematic design, design development, and production of final construction documentation

When coordinating drawings from several trades, design modifications are necessary to resolve conflicts
Unique buildings and structure design
Developing solutions of unique or custom structural support
Evaluation of alternative design alternatives for structural integrity and bespoke architectural design features
Activities associated with design, such as estimation and programming
Review and modification the design to save money and increase energy efficiency
Alternative material evaluations for certain design needs like sound absorption, energy efficiency, etc.
Creating master blueprints for architecture
The development of curtain walls, façades, and other enveloping systems for buildings
Qualified Activities for Engineering
Design of a foundation based on geotechnical findings
Overcoming project site issues through design alternative development
Seismic retrofits for structural designs
Industrial process development for manufacturing facilities
Environmental rehabilitative measures
Conducting CAD and BIM modeling to create 3D building designs
Computer-aided design and simulation of site conditions
AutoCAD, REVIT, BIM, HEC-RAS, STAAD, and ANSYS utilization
Changes and adjustments to the design as a result of regulatory compliance concerns
Case Study

Case Study in Architecture and Engineering

This structural engineering business utilizes cutting-edge technical methods and technologies. Their expertise lies in conducting exhaustive studies and analyses of structural components using technologies like radar, lasers, acoustics, pulse velocity or impact, fiber optics, x-ray, and ultrasonics, as well as a variety of monitoring devices for cracks, tilts, winds, and environments for extensometers and large-scale movements. Additionally, the business is adopting sustainability principles and "green" building techniques and procedures.

Architecture and Engineering Activities Are Eligible

for R&D Tax Credits

Engineering and physical science principles were applied to develop new or improved designs, techniques, and processes. The business developed and examined different designs to ensure the plans met particular needs. The firm's research and development process were continuous and iterative since each phase of development generated fresh data that was used to accomplish a goal. Each year, several R&D activities were undertaken concurrently, and each endeavor was unique.

The business analyzed drawings and technical requirements to identify opportunities for improvement, with a particular emphasis on alternate material utilization and structural enhancement. Team members transformed the submitted ideas into a digital format for in-depth research. Green Building Design/LEED, seismic analysis, alternative material testing, load and grade computations, acoustical quality enhancements, and stress factor evaluation were frequently incorporated into research efforts. When developing a structure, strength and stiffness were key factors, since sufficient load support must be provided to minimize strains produced by seismic activity. At this step, engineers produced assumptions about the most likely development path, using technical knowledge about codes and by-laws, physical principles, and overall risk.

Iterative problem solving involved evaluating different solutions using research, topographical data, material performance under a variety of climatic conditions, and load pressures.

This business developed 2D, 3D, mathematical, and analytic models using software tools. The business evaluated whether engineering calculations satisfied specification criteria for geometry, materials, and constructability using REVIT, BIM, and CAD software platforms. Data were gathered to assess failures, faults, and associated performance requirements. If the failure was serious, the procedure reverted to research and conceptual design.

During testing, the business used simulations to validate digital prototypes generated during the development's modeling phase. Multiple design possibilities were evaluated against a variety of criteria using virtual testing. For instance, to forecast design failures before they happened in the field, they used static and dynamic simulations to assess the design's performance over time.

Due to the technological complications faced in the field, detailed design and development, as well as construction, may occur concurrently. Once construction commenced, certain components of the plans frequently failed or needed to be revised to ensure the proper sequence of work was carried out.

Results Speak For Themselves

Federal credits totaled $275,000 for an A&E firm in the current year which is associated with yearly R&D costs of about $4.7 million.

$275K

Federal credits for an A&E firm

$4.7M

R&D costs

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Hire US-based engineers, developers, or scientists.
Designs and develops product prototypes and/or software.
Performs experimentation and validation on products, manufacturing processes, and/or software.
None of the above.

This calculator has been developed utilizing data from a variety of studies conducted in the industries listed. This is only an approximation based on a variety of assumptions and should be treated as such.

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