Tag Archives: future

Architecture and Design Fees: Why hours?

money by fedee P, on FlickrWhy is it, that in an age where the value of a company is no longer based on assets or staff numbers, but on ideas – that architects still charge by the hour?

Once upon a time, the value of a company and the number of staff it employed had some correlation, but today this is no longer the case. In 1979, GM employed 853,000 people and had a turnover of $66 billion, today Google turns over a similar amount but with only 60,000 people.  The stories for Microsoft, Apple, Facebook and many other companies are the same.  Making money is no longer tethered to staff and hours.

In architecture, interior design and engineering however, hourly rates are still the norm. “When they choose to strike out on their own, architects tend to follow the outdated model of trading hours for dollars. One of the consequences of this mindset is the fact that clients continue to perceive architectural services as a cost rather than a value.” (Quote from Architizer) Even if, as is commonly the case, a lump sum fee is being generated, this is usually based upon hourly charge out rates of staff multiplied by a guess (educated or otherwise) as to how many hours a task will take. (I’ve written about traditional fee methods previously here) Clients commonly expect a detailed breakdown of the number of hours allocated to each staff member across different project phases. Why are we charging this way when it both limits our ability to increase profit as well as our flexibility in how we deliver services? If I can reduce my hours either by the selection of staff or by automating part of the process, shouldn’t I as the business owner be able to chose if I pass this saving onto my customers (clients) or if I achieve a higher margin? Why is is that clients seem to think that architects and designers are trying to rip them off with higher margins.  Architectural margins are  very low, and in some sectors fees have effectively shrunk over the last 15 years.  We need to make money where we can in order to stay in business.

Obviously at some point there is a minimum fee a company with employees has to charge in order to pay costs, overheads and salaries – although perhaps salaries also need not reflect hours. If architects don’t charge by the hour, what could the alternatives be?

Charging by  the deliverable

In some senses we already charge by deliverable – the lump sum fee essentially considers the building to be the deliverable. While it’s important we don’t lose sight of this fact, the truth is that not every building requires the same amount of work. A great article on this topic is the story of 3 bike sheds by Dimase Architects  which clearly explains that architectural services are not just about building types or construction budgets but about desired outcomes.

Outside if the residential sector, it is also very common for client organisations to dictate deliverables, meeting schedules, required reviews and documentation standards. Frequently these requirements have very little to do with delivery of the building, but are to meet the client’s managers or user group expectations. Sometimes they come with extensive time and cost impacts. How do we charge for a video walk through? The hours in producing the video itself might be very low, but should the cost of software licenses necessarily be considered an office overhead if only used on some projects? Maybe only 1 or 2 people in the office are capable of this work. Should the fee structure for this work take these factors into account?  This leads to the idea of value based fees.

Value based fees

How valuable is your service to your client?  This is a concept I find really interesting, the idea that you change a client based upon the value they place on your services or even the value you create for them. A residential complex is the most obvious example, if you can design to fit in an extra apartment, the developer client makes additional profit, so why should the architect not benefit from this via some kind of bonus? Some would suggest that the architect might compromise design quality at the expense of profit, but I’d say if you are working for a developer – you probably already feel like you are doing this but not getting paid anything for it. In some ways this would be align the architects and the developers interests better.  Most architects would still value good design and their own names and developers would realise that at the point when the architect said no more apartments would fit, they really had reached the sensible limit.

I can see how this kind of fee structure could apply to many kinds of development – car parks, childcare centres or nett lettable area of office buildings. The challenge would be how to apply value to the more difficult to measure or immeasurables like productivity in an office or the positives such as mental wellbeing coming out of good quality design.

I can also see the potential that this fee structure could perhaps backfire – some clients would only want to pay based upon achieving targets or would impose fee penalties for not meeting targets.  But possibly they are the types of clients who already try to get free work or push fees down that we would all rather not work for anyway!

Architect as developer

If you search the Internet for blogs about architect entrepreneurs, the architect as developer is the most common model. Instead of working for the developers, why not become one yourself? So far, the examples I have seen generally relate to small to medium scale residential developments or small commercial premises (you can find lots of examples at Archipreneur). It’s certainly true that the profit margins are higher in development than architecture, although the risks are obviously greater too. However, this model will only ever work for certain project types.

A similar model that has recently emerged is architect as one investor rather than as developer.  This model seems to be emerging in non-traditional development sectors such as The Commons in Melbourne or SWARM in the UK. What both these two initiatives have in common, is the idea of quality development for the good of the community.  Again, this is a potentially higher risk model than traditional architectural practice, but could allow architects interested in working on projects with a social conscience a lot more scope for both work and potential income.  Again, this model won’t apply to projects where there is no development to invest in (eg an educational facility or a client workspace).

Creating proprietary products

Architects often create designs as part of their commissions, they may work with suppliers for one off custom elements to be incorporated into the project.  Very few architects get paid for this.  Apparently Renzo Piano does.  He was involved in developing a new glass louvre system developed for Aurora Place in Sydney and now he gets paid when the product is used on other projects.

So what about our salaries?

One of the things that any model of fees has to take into account is how we pay ourselves and our staff. If our project fees are no longer based upon hourly rates, should the way architects are employed and paid also change? The idea of the gig based economy, where freelancers sign up for a set fee to a specific project (similar to a movie production) is often mentioned in the context of architecture and the economy of the future more generally. Whilst I can see that this could work for larger projects where architects may be involved for 2 years or more, would it be as well suited to smaller projects which may only run for a few months and frequently don’t require full time involvement? Perhaps this is only my current bias or perception, as the idea of piecemeal freelance work continues to grow more common for projects and tasks both large and small, and as technology and co-working allow different options for working together maybe this will be feasible. If we do move towards this model, payment structures would need change, likely increasing to assume that people don’t always have a forty hour work week. An industry structured this way could be a good or bad thing – potentially better work-life balance through time off between projects but potentially more stress about where the next job is coming from.

Maybe our employment structures don’t need to change all that much.  The idea of bonuses or profit sharing isn’t a common one in architecture and interior design but there is no reason this couldn’t be change very easily.

There are a lot of other ways that architects and designers are making money through non-traditional structures, but many of these are quite limited in their applications or potential to earn – for example internet competitions, although the guy who runs the site probably does quite well from it.  But this takes us into non-traditional services, offering services for other architects and designers, which is becoming relatively common on the web (examples include ArchSmarter and EntreArchitect).

I’d like to think there will be a viable model for fees for designing buildings and interiors for other people and organisations, which recognises and pays for the value of design.  We have to remember that“Concept design is not a loss leader. It is our most precious commodity.”  Design is what our clients value us for, and its not something that can be calculated by the hour.

I’d love to hear from anyone working with non-traditional fee structures, or with other ideas about how architects and designers can structure their fees.  Has anyone worked on a value based fee project?  Or even a project which included a bonus for the architect?

Ceilidh Higgins

Image Credits: “money” (CC BY-NC-ND 2.0) by fedee P

Where to From Here: Embracing technological change

la libertad tiene un precio. by ... marta ... maduixaaaa, on FlickrIs architecture on the verge of the greatest change in centuries? Ceilidh Higgins looks to the future and predicts disruption of epic proportions. This is part of the ACA’s Where to From Here series, which invites reflections on the recent ACA – SA State of the Profession research.

The architectural profession could be sitting on the brink of the largest shift in how we practice since the Middle Ages and the time of the master builder. Alternatively, we could become totally irrelevant to anything except the boutique house. The scary thing is that much of our profession seems totally unaware this seismic shift could soon occur.

I really enjoyed writing this article for the ACA, it brings together a number of topics I have written about over the last few years.  To read the full article go to the ACA website here.  If you are interested in the ACA-SA State of the Profession research you can find a summary here.  I also recommend checking out the other articles in the series.

Ceilidh Higgins

Image credits:la libertad tiene un precio.” (CC BY-NC-ND 2.0) by  … marta … maduixaaaa 

Is Disruptive Innovation possible in the construction industry?

fishbowl jump by Kay Kim(김기웅), on Flickr
Lately I have been finding the term “disruptive innovation” everywhere.  From events about green buildings and BIM, to blogs and even the Australian Prime Minister – everyone is talking about disruptive innovation, what it means and how it is changing business and our lives.  Along with robots (see my post on robots here), the concept of disruptive innovation seems to have become one of the mainstream technology trends to talk about in 2015 –  replacing big data as the hot topic (and see my post on big data here).  But has disruptive innovation yet impacted on the construction industry? And if it hasn’t yet, will it? I worry that sadly the answer might be no.

The construction industry is one of the least efficient industries – and this is a worldwide issue. This year I heard someone describe the construction industry as ‘the last craft industry’ and this is certainly true.  Whilst so much of production and manufacturing has become rigidly process oriented and quality controlled, prototyped and tested – even in developed countries, almost every building that we build is still a one off design, constructed piece by piece on site.  The inefficiencies of all phases of building – from procurement through to design and construction are outstanding.  Even when a building is not designed by an architect, if it’s larger than a house, it’s almost certainly a one off design.  Even in Australia, where site labour is a significant expense, prefabrication is the exception and not the norm.  We actually have less standardisation than in the larger American and European markets! As architects and designers in Australia we expect to be able to customise almost any product, and often at no extra cost because so much is custom manufactured for each and every project. All of this results in additional costs, both to those supplying services and products related to buildings which are then passed onto those purchasing buildings.  I have seen estimates suggest that the construction industry wastes a mind boggling 20-30% of building costs  – possibly equating to somewhere around $1.7 trillion (USD) worldwide each year! I found one estimate that 50-68% of time on site is wasted!!! Just google construction industry waste and you will find heaps of articles from around the world in relation to both time and materials.

All this would suggest, that buildings and construction should therefore be ripe for disruptive innovations – there is clearly a massive problem here.  BIM, prefabrication and robots have been seen as possible saviours of the industry, that would increase efficiencies but are they effective and are they disruptive innovation?  In the UK, the government determined in 2011 that BIM would generate savings and efficiency for government projects, and they have mandated its use on all government projects over 5 million pounds.  There is plenty of evidence from the UK and also from around the world that is demonstrating that BIM is reducing construction costs (for example refer to this series of articles by David Mitchell on ROI of BIM) – and one assumes without reducing quality of outcomes.  The UK mandate targets that by 2016 all projects will be what is defined as “Level 2 BIM”, but there is no date yet set for “Level 3 BIM”.  So BIM has already been around for easily 10 years already now, and still with no end date for this higher level uptake by industry – 15 years of change seems to slow to me to be defined as disruptive innovation. I’m not so sure that BIM is “our Facebook revolution” (see this article on Digital Built Britain)

Perhaps before we go much further, we need to define – what is disruptive innovation anyway?If I ask google the answer (via wikipedia) is ” A disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leaders and alliances. The term was defined and phenomenon analysed by Clayton M. Christensen beginning in 1995.”  The frequent examples we are all familiar with include Airbnb, Uber, iTunes and Facebook.  To me, I’m not quite sure that all of these actually meet the requirement for a ‘new market’ – how is the Uber market different from the taxi market? But the key point is that they create a new way of service or product delivery that is completely different from what has come before rather than just being a little bit different – cheaper, easier or more competitive.  For example Amazon is not usually viewed as disruptive innovation, its just a slightly different way of providing goods, at a conceptual level it’s basically the same as the very old fashioned mail order catalouge.

So is BIM a disruptive innovation? I think not. When I first attended RTC back in 2009, and really started to see the possibilities of BIM beyond just 3D modelling and how we could move towards buildings being built from models not documents, and I was seeing all the resultant changes this would bring to our contractual and teaming arrangements, I think I would have considered that BIM would be a disruption to our industry.  But now 6 years later, how much has really changed?  Buildings built from models are still very much the exception rather than the rule, as are alternative procurement and contracting arrangements.  In the same time, Airbnb (started 2008) and Uber (started 2009) have taken over and are serious dominators in their respective markets.  I think there are a few reasons for this slow uptake of change in the construction industry.  One is that with BIM, we still have the option to do things the old way.  We can combine a bit of BIM with traditional paper documents and contracts.  It’s not an all or nothing alternative.  The other is the scale and structure of the market purchasers.

I have been thinking a lot lately about what these kinds of disruptive innovations have in common and how they differ from architecture and construction.  The key issue to me, is that almost all of these commonly discussed disruptive innovators rely on the power of individual consumers and not government and big business.  Can you think of any disruptive innovations that have been driven by or even embraced by Government? Or even big business? (A related question to ponder another day – is activity based working a disruptive innovation?)  If anyone has any suggestions, I’d love to hear them – I can’t think of even one.  So recently when I came across on article on crowd funding for the property industry, I wondered – could this be the driver for disruptive innovation in construction?  Crowdfunding brings in the individual consumer, could this be the missing link?

However upon reading the article, I don’t think so.  Whilst the project funding might be obtained from smaller individual consumers, the project is still run by a larger developer –  it’s just a new way for them to get their start-up capital, like the idea of off the plan apartments really.  Whilst the smaller investors may start putting the pressure on for greater efficiency this is more likely to push incremental improvements rather than disruptive innovation.  The article concludes with the suggestion that within 6 years these crowd funding ventures might be owned by banks, so disruptive innovation seems highly unlikely!

What about other aspects of technology?  Could robots and prefabrication cause disruptive innovation in construction?  Again these are technologies that have been developing for some time – prefabrication for probably over 100 years now! Whilst both offer opportunities for efficiency gains in design and construction, like BIM, they also offer us the opportunity to take small parts and combine prefabricated or robot built items alongside traditional methods.  Robots might be laying bricks, but did they pour the concrete slab yet?

So far, the best opportunity I have seen for disruptive innovation in design and construction is going to come from algorithms rather than robots, through the form of software like Google Flux.  Flux automates the building design based upon site conditions.  (You can find out more about Flux in this video from my presentation and blog on Will a Robot take my job or here on Randy Deutsch’s blog ) There is no reason why either much of the model or the documentation would not be largely automated out of this software as well.  Whilst I believe humans (as architects) will always be involved in designing high quality buildings, much of the work we do as architects could be automated.  I have recently heard said “the computers don’t have to be perfect, they just have to be better than us”.  Why should a human spend time drawing up all the details and layout of a toilet when a computer could do it faster and make sure it meet the building code? The parts could then be prefabricated or assembled on site by robots increasing construction efficiencies.  Developed outside the traditional markets, could Google displace Autodesk as the primary software provider for building design and the disruptive innovator that changes the traditional delivery of architecture? I think it’s possible.

I think it’s also possible, that architects won’t see the potential of these tools, they will see the admittedly ugly buildings that the beta version of the software produces, and believe it’s just a tool for developers to quickly design and build boxy buildings.  If architects don’t engage with these technologies, that is probably what they will become.  But what proportion of our clients are coming to us for high end design? If developers, governments and big business don’t need architects any more what happens to our industry? What happens if construction innovates but architecture doesn’t?  If construction innovates and becomes more efficient, will that leave architecture behind? Does architecture become even more of a boutique industry catering to rich people’s houses?

What about disruptive innovation in construction itself? If not robots or prefab, what could it be?  Is disrupting design sufficient to disrupt construction? Or are there other disruptive innovations out there on the horizon?

Ceilidh Higgins

Image Credits:
Creative Commons Creative Commons Attribution 2.0 Generic License   by  Kay Kim(김기웅) 

Will a Robot take my job?

If I am an architect, a designer, an engineer or even BIM manager – Will a Robot take my job? This is the big question I recently presented in my talk at RTC Australia as part of the session BIMx: Big Ideas around Big Data.  Open up my slideshare presentation above that accompanies this blog post.

NESTA, a UK innovation charity has a quiz you can take to see if a robot is likely to take your job.  The quiz asks a series of 6 questions around skills and ongoing learning, if you manage complex real world tasks, work with, teach and manage people, or design and manage technology, machines and systems. It uses your answers to determine how likely it is a robot would take your job.

The answer is that an architect is “Robot Proof” with a low probability of a robot taking our job.  BUT does this match with our experience? Are architects, engineers, or designers really likely to be robot proof?

Whilst we think a robot won’t take our job – what about a computer?

Many of us would agree that BIM has already resulted in smaller project teams. Computers have long been a part of the design process.  Whilst we often forget CAD standards for ‘computer aided design’, computers can now aid the design process in much more significant ways than back when AutoCAD was released. Its interesting though that today a google search of computer generated architecture still mostly generates links related to rendering and imagery, rather than designs produced by computers.

If you think that BIM won’t take your job – what about Big Data?  We are already using data to check, verify and evaluate options within our designs. As the scale of the data available gets ever bigger these processes become more complex and more powerful. Right now google searching for data generated architecture won’t get you many hits related to buildings, but this is sure to soon change.

Rules based checking might not yet be big data. But it is about using data sources to validate designs or documentation. Examples include checking codes or standards using software such as solibri.

Again data analysis doesn’t necessarily mean big data yet.  Analysis began as something that architects did using pen and paper, a site analysis diagram for example. Data analysis is starting to become more computer driven which allows for much more significant analysis to take place.  Examples include environmental or performance analysis of buildings, or analysis on a larger city scale looking at land use and traffic patterns. This kind of analysis is very much in the realm of current uses for big data.

Data is also the basis of simulations. For example fire or traffic simulation modelling is based upon creating algorithms from data. Currently the simulations used within the AEC industry are relatively simple algorithims.
Big data gives the potential for developing significantly more complex simulations. Last year at RTC in Chicago I discussed the potential for big data to allow us to simulate human behaviour in complex building types such as workspaces with the potential of increasing a companies productivity. (see blog post here)

So, data can evaluate design – but could big data actually drive design? Is it already happening?  As with data based checking, its certainly true that data driven design exists already – and has for some time, although generally not yet into the possibilities of big data. Computational and generative design is data based upon algorithms and therefore data based design. Algorithms are already being used for design in many different ways.

The use of formulas to create design is an example of data driven design.
An example is the façade of the Auckland Savings Bank by BVN and Jasmax which was designed using Microsoft Excel and the Chaos formula.

The structure of the Watercube by PTW and Arup was designed using an algorithm to determine structural steel member sizes.

A simulation is just another kind of algorithm. Rather than just using simulations to test current design proposals, the simulation algorithims can be part of the design software and the design options can be based upon the outcomes of the simulations.  This bandstand by UK architects Flanagan Lawrence was designed using Dynamo and an acoustic simulation algorithm called acoustamo.

Algorithms can be used to optimise an existing design. At the Barclays Centre by ShoP – detailed design of the steel panels was undertaken using CATIA to generate options which allowed a reduction from 230,000 sqm of steel to 150,000sqm. No two of the 12,000 panels are the same.

This exhibition hall building was designed by the University of Stuttgart’s Institute for computational design.

The question – How can you create a resilient timber structure with as little material as possible? This is a simple example of applying one rule to a simple building type. Using an algorithm inspired by a sand dollar one of natures most efficient structures, this building was designed by computer. The human input to the design is the initial idea and the design of the algorithms. (Read more)
As a side note, it was built by robots too.

What about more complexity? The complexity of trees growing in nature? There is actually already an algorithm for that.  The programming to create suburban housing exists too (its initial use is for generating realistic houses for 3d gaming environments). Using rules based criteria such as number of rooms, adjacencies and architectural style, a suburb of varied housing can be produced.

With big data the questions and the building programs can get more complex. And these kinds of design tools are not as far away as you might think.  Autodesk has a lab project in development called Dreamcatcher. “Dreamcatcher is a goal-directed design system that enables designers to input specific design objectives, including functional requirements, material type, manufacturability, performance criteria, and cost restrictions. The infinite computing power of the cloud then takes over.” The publicity for Autodesk’s Project Dreamcatcher suggests it is for industrial design – the same could potential apply to create rules based design solutions for buildings.

Autodesk are not the only company investing in this technology. Google has setup a spinoff called Flux to explore how data will shape our future. Right now Flux software and much of the media is focused on the metro scale data analysis but the future of Flux is about buildings.

Flux asks “What would happen if we stopped designing individual buildings and started designing building seeds” It is based upon the idea that the data will form seeds.

The information would include the codes, standards, weather conditions, occupant data, building product data and other information available about a building, its site, its occupants and client requirements as well as industry data such as materials, systems and construction methods and costs.

Just as each seed grows up to be a different tree, the building data seeds will grow to be different buildings depending upon the site and its constraints, the client requirements and other project specific inputs.
This kind of design will have a significant impact upon the way our industry operates.  (See post by Randy Deutsch)

This is a clip from a talk by Jen Carlilse co-founder of Flux. (Embeded in slide share or at youtube)

We probably all agree that the building examples in the Flux video are somewhat lacking in the architectural beauty department.  If nature could be an algorithm – could beauty also be an algorithm? Is there the possibility that in the future we could use data analysis to design beauty into our buildings, to use data to design buildings like the Sydney Opera House?

So what will my job be? It won’t be drafting disabled toilets anymore that’s for sure.

I’d like to think that the data will allow us to get rid of the drudgery. It will allow us to focus on the best parts of our jobs. It will allow us to realise the true value of design.

We will still evaluate the computer options and talk to the clients. Whilst data can assist us to make decisions, the human race is not about to let everything be decided purely on the basis of data – if we did we would be doing it already. Human nature is that we still want humans involved in decision making. We still need to tell the computers what to do at some level. Does it mean we all become programmers rather than architects and engineers? Could this process can bring out the best in both humans and computers?

What do you think your job could be?

Ceilidh Higgins

 Imaged Credits:
See slideshare presentation for full image credits.