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Is regulation the answer to fee MADness?

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Is reintroducing fee scales and further regulation the solution to fee slashing and ‘the race for the bottom’ among architects?  Is this really feasible in a world of increasing globalisation and diversification of service providers?  If not, what other options are there?

Recently I read this article by Shaun Carter, immediate past president of the NSW Chapter of the Institute of Architects and a principal architect at Carter Williamson Architects.  Its really great to see Shaun speaking out on the issues of fees – and what he describes as the ‘existential crisis’ of fee madness – the ‘mutually assured destruction’ of architecture as a profession.

Immediately after reading the article, I felt compelled to join the conversation and comment – and then realised I had the beginning of another article on fees forming in my mind.  Fees are a topic I have frequently written about over the five years I have been writing this blog (from The art(or is that science) of architecture fees to talking about fees and BIMonomics and more recently Architecture and Design Fees: Why Hours), and so Shaun’s article was of great interest to me.  Essentially he proposes that the solution is regulation across three platforms – minimum fees (essentially a return to fee scales), government as a model client and limiting architecture graduates.

Is regulation, restrictive trade practices or collective bargaining the right answer? While I used to think that maybe regulation could be a solution, I wonder how does regulation in NSW (or in any other Australian state) solve a problem which is national, but also potentially global? How can you regulate at the edges of architecture – for example in fields where architects and interior designers compete? Do we really believe we can regulate if your competition is Google or Amazon? (Right now in the USA I think its the other way around…Amazon are practically setting the regulations with the offers that came in from cities determined to win Amazon 2 HQ!)  So personally I don’t think regulation, in particular fee scales is the answer.

However that doesn’t mean there is not a place for advocacy and education – both of architects and of clients. I agree with Shaun that “Clients don’t recognize that their service is cut-priced, but have the same expectations as a good, fee-paying client.”  Fees have dropped so far, that many clients including project managers, would have no idea of the real cost of the work they are bidding, only ‘market rates’.  Many clients have no idea of the amount of hours that go into designing and documenting a building or a fitout – I’ve had more than one project manager assume that my job is done after concept design “don’t you just hand it over to the engineers then?”

I’d love to see both the Board of Architects and the AIA take leading roles on the issue of cut priced fees and client education, alongside of other organisations working in the design of buildings – the ACA, the DIA, Consult Australia, Engineers Australia and more. This isn’t just an issue for architects but for all design professionals.

One of the “frequent offenders”clients guilty of this is our own government – at all levels across a wide variety of agencies and institutions. Cut throat fee bidding in government work where price is the only criteria has been a problem for years. Back in 2014 I published this piece on one architect who tried to take a stand against this practice, after uncovering one government agency who admitted they would have to accept a tender of zero if  pre-qualified firm chose to submit it.  (I also commented on this as ‘madness but without the great acronym!)

Maybe if you don’t work in the government sector, you believe that the fact these firms have been in business for long enough, with enough of a reputation and standing to be pre-qualified for government work, that they wouldn’t engage in such foolish business tactics. But when the work is low (or even often when it’s not), it’s such common practice as to be the norm. And then it’s paid for by the staff (even by the principals and directors) working long hours for free or by compromising the quality of documentation – thereby driving up construction costs and waste.  As mentioned in Shaun’s article, there is no way that low fees don’t equate to lowered quality of service. Even if a company is spending the same hours on the project – if many of those hours are unpaid overtime the quality of the work is lower. (There is so much evidence that working 50 or more hours a week compromises the quality of your work).

Shaun’s call for Government to lead the way as a model client is a fantastic idea (and while we are at it, perhaps some model client contracts from Government where risk is fairly distributed and copyright ownership retained?) I agree that if our government at all levels takes the lead in demonstrating the value of good design and the better outcomes that could be achieved, it is more likely more private companies would follow. Whilst I’ll admit, initially this is regulation, I’d perceive it more as leadership by Government, rather than purely a regulative measure.

Leadership needs education.  Everyone who designs needs to be part of educating our clients, but advocacy by the AIA or the boards around Australia could help make a difference. Not just for today’s clients, but by educating tomorrows clients to appreciate design. In Scandinavia, design education starts in primary school and an appreciation of design is a part of the culture. More recently, Australians too are coming to appreciate design, you see this in the quality of our newer cafes, restaurants and shopping centres and in our obsession with home renovation reality TV. But “clients need to understand that design excellence costs money” (and takes time). This is where the home renovation shows do professionals no favours.  Where are the shows about architects or interior designers? Other than Grand Designs, notably absent.

For too long design has been undervalued in Australia, and this is because we need real evidence to back up and underpin this education.  Evidence that will prove to everyone – clients, project managers, even builders and the architects/designers themselves that design really does add value.  To do this we need more research, research like the new RASP project, that sets out to prove the value of design through the question “Do architect designed renovations improve capital gains in the Melbourne residential property market?” Whilst this research relates purely to architects and residential design, there are so many possibilities for commercial, institutional and other sectors to benefit from similar projects. The retail sector already knows it, and has long invested in research to understand how design drives consumer behavior, and the payoff is clear and direct. In other sectors the questions and the payoff is not so straightforward. The problem is that individual clients or practices can’t afford to fund this research. At the University of Sydney around 100 workplaces have participated in the BOSSA project for post occupancy evaluations – how much more extensive would this dataset be if we have if every government workplace had a post occupancy evaluation? Again,this is another area where the Government could play a leading part. Why isn’t the CSIRO involved in this kind of research?  Improving the design of our workplaces could be a key means of improving our national productivity.

While good design does cost money, our professions need to also take responsibility for productivity and efficiency. While we might have BIM capable software, there is so much wasted human capital and time in most architecture practices. Our actual fees might be a lot lower if we invested more in technology and training. The whole of the construction industry is guilty of not investing in software, training or automation. Is this because of a lack of education at leadership level, a lack of understanding of how technology can benefit us or is it fear of change, a distrust of technology and of individually being left behind? Or are we now in a vicious cycle of low fees, with nothing to invest? Whatever the root cause, our industry will be left behind if we don’t invest in technology. I’ve written in the past about the coming wave of automation, (Will a Robot take my Job? and Is Disruptive Innovation Possible in the Construction Industry and more recently, I’m a designer and I job share with an AI) – if you didn’t know, it’s already here.  If you have not started to think about how you can automate routine parts of your practice you will be left behind. When our fees are so low already, how can we afford not to automate where practical? Why should we be calculating the space for fire stairs or toilets when a computer can do this so much more efficiently that we can.

We don’t just need to educate clients, but we also need to train young architects and designers more in business – and even more so, in innovation and entrepreneurship. Architects might not feel that traditional business and accounting is their thing – but innovative ways to develop new business could be more appealing.  Especially if we continue to train architects in such numbers – we need to train them to expect to be other things than a traditional architect, because there will not be nearly enough jobs.  Maybe we don’t need to limit the number of graduates, but to value architectural training as the background to many other avenues of design thinking.  If the next generation are nimble and accept change, and learn how to keep learning throughout their careers – maybe they will take their valuable design thinking into broader roles. I am constantly surprised at how architecture and interior design are creative professions but so many practitioners are so resistant to change (how many architecture practices do you know who have implemented activity based working…)

We can’t just expect the universities to teach business awareness though. For too long in too many practices, fees and charge out rates have been too secret – something that graduates are not expected or even often allowed to know about. Everyone at all levels should understand the fee budget and how their work contributes – just like when a client doesn’t tell us their budget, how can you expect someone to understand how their time contributes to the job cost if you never shares any information with them?

Finally, we need to think about how we charge. The world has moved on from dollars per hour. The ability to make money is no longer linked to human capital. This is the major lesson for all professions where we have historically charged by the hour. So I think we need to be thinking about value based fees, and about not fee scales. I’ve never worked in a time of fee scales, but I can’t see how fee scales in a time of globalisation and diversification are going to protect our jobs and fees. Fee scales won’t stop Amazon or WeWork from taking over the traditional roles of architects.

So what is a value based fee? The value of your work, the value of your ideas.  I’ve written in a lot more detail previously on this topic in the article Architecture and Design Fees: Why Hours.  If we start to think and talk about fees in terms of our value, and the value of our work – can we continue to justify cut throat fees in our own minds?  Aren’t we devaluing our own work that way?  Of course when clients don’t value our work and our profession doesn’t value our work – we have a problem. So thats why proving our value to others is also a key part of the solution.

I agree with Shaun – three things need to change – although my three are different:

  1. We need to value ourselves;
  2. We need to invest in the future; and
  3. Our clients and those who occupy our buildings & spaces need to value us
 Maybe I’ll add number four – we need to envision a future where being an architect or an interior  designer doesn’t always mean working in a traditional practice alongside only other architects and design professionals. Whilst Bjarke Ingels is a talented designer, BIG is a successful mutlinational firm because the CEO, Sheela Maini Søgaard comes from business not architecture. A lot of architects I know would be quite scared by that notion.

Ceilidh Higgins

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Photo by rawpixel on Unsplash

Architecture and Design Fees: Why hours?

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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

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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 it value for money if your architect is free?

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Money by 401(K) 2013, on FlickrArchitecture and interior design fees are always something that you readers here at The Midnight Lunch seem to enjoy  – and recently I’ve been reading some great stuff about architectural fees written by other people which I thought worth talking about and sharing with you – and then you can share it with all of your friends.  (Also check  out previous The Midnight Lunch reader favourite The art (or is that science) of  architecture and interior design fees)

Whilst we may get together and grumble about fees amongst  colleagues and our friends working for competitors, how often is it that an architect speaks out more publicly about fees –  to both the client organisation and to the competing architectural community – not very often in my experience. The way architectural fees are going, maybe it is something we need to see more of if we are all to actually stay in business and earn a living.  Whilst many firms thought they could cost cut during bad times and raise the fees again later this has not been the reality.  I’d say fees now in 2014 are comparable to 2004 – and I know that nothing else is.

Recently, this wonderful email written by Stephen Malone of MCA Architects was forwarded onto me (and I thank Stephen for allowing me to share it with all of you).  I’ve removed the name of the client and some other identifying references related to them, but you will certainly get the idea.  I’ve also highlighted in bold a section which I think is particular of interest.

Thank you for the briefing  meeting  which I am  sure all attending  Architects found  helpful.

I  trust you do not mind  me  circulating the following to the other Architects in attendance.

I raised with you informally our  practice’s concern  about the  level of fees which consultants were being paid, in relation  to the client  requirements in the design of the projects being undertaken  by [the client].

It is entirely reasonable that the [client] requires projects which are well designed and documented , given the buildings are for public [use].

However , notwithstanding the  [client’s] desire to achieve high architectural standards it is accepting  fees which  are markedly below  normal commercial levels.

The following illustrates this.

The total Project on costs commercially for similar projects are about 14% – 16% related to  a  construction  cost of say $3,000,000 made up as follows:

All  consultants fees design and  documentation only (excluding  QS and  specialist consultants) approx 8%- 9%

Tendering  and Contract administration approx  4%- 5%

Project Management                                                     2% -3%

You indicated in a previous  discussion with me that a similar figure of about 15% was used by the  [client] .

 

However the Fees being  accepted for Design and Documentation  only, by  consultants are in the  order of 4% (viz  50% of normal  commercial practice)  and  sometimes in  our recent  experience even  less . This means Architects are prepared to design and document buildings for the  [client]  for about 2% of the  value of the works ( the architectural  component is about 50%  -60% of the  consultants fees).

This in normal commercial practice would hardly cover  the  cost of the considerable amount of work involved in obtaining a Development Approval!

This also means the [client’s]  residual percentage is  about 11% or  about twice normal  practice, so the client ends up paying the same amount for all on costs , but  does it get the quality ?

Given  the massive amount of [projects] which has  been, and is being undertaken by the [client]  there should be by now  quite a few awards and public recognition and appreciation. I respectfully suggest this has rarely occurred and at these level of Fees is unlikely to occur.

Consultants whilst wishing to create work of a high standard sooner  or later look at their time sheets and  press the off button on the  computer.

You  can only “buy’  work so often and Architects are particularly naive in this  respect. As a fellow Architect you would know the practice of architecture is commercially vulnerable , subject very much to supply and demand. In difficult times fees can absurdly low.

You indicated to me that if a consultant offered to undertake a commission for nothing , they may still be  engaged, as it is in the [client’s] interests  to obtain the  lowest fees available. However Governments and their agents have a long term social responsibility and  a superior outcome would be achieved if fees more in  line with normal practice were accepted.

This can be done, and our own  practice has a variety of clients (including institutions ) who  will not  accept bottom line fees.

They know from bad  experience what the outcome is likely to be.

We view the [client’s]  mandate as immensely important for the public [deleted] and will trust these concerns will receive appropriate consideration .

Sincerely

Stephen Malone

DIRECTOR

MCA  architects

 

Madness, isn’t it.  We are driving our own profession into decline, by the practice – which if we were selling goods – would be known as dumping, and in many jurisdictions would be illegal! (See a discussion of ‘dumping’ in the comments in this post on Entrepreneur Architect) But here in Australia, many government clients (at all levels) are positively encouraging it – to the detriment of those now and in the future that occupy the buildings and spaces procured this way.

So how can we encourage our clients that this process of selecting the cheapest will not result in value for money? We all have to educate them, and we all have to resist the urge to undercut our competitors.  For a great blog post explaining in simple terms why architects charge different levels of fees, check out this post from Di Mase Architects – perhaps this should be essential reading for all clients.

At the end of the day, we all need to also remember that fees = salaries.  Do you want to be working for free?  Recently spotted on Twitter – “It’s amazing how creative you can be when your have interns working for free” (Tweeted by the great parody account @RoyalAusINSArch).  This one is certainly pretty close to the truth in a lot of practices – but its not just the interns working for free.  If you look at the latest DIA salary survey, design salaries are at minimum wage levels or less, and I have seen UK surveys that have indicated architects salaries are static.

I applaud Stephen for his stand, and for communicating such a well considered email, as well as the fact that he sent it both to the client and to the other architects working with this client. Its interesting to me that back in the 70’s price fixing for architecture was removed as a consumer protection – but now we are in a situation where we as architects and designers seem to be needing protection from the consumers, and that the consumers seem to need protection from themselves – as Stephen points out, you don’t get great architecture for free.

Ceilidh Higgins

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PS. Come and see me at RTC Melbourne where I am presenting “Get your Groupon” at 2.30pm on Saturday 31 May.  Soon after I’m off to the USA where my alter ego Stuart (the girl) BIMimion is presenting as part of BIMx at RTC Chicago.  Follow the BIMinions on twitter throughout both RTCs – @BIMinions.

Is your architecture or design client value for money?

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Money by Philip Taylor PT, on FlickrLast week I started a discussion on how the client and their expectations impacts on the cost of design. Whilst there was some hope expressed on linkedin about this next post offering solutions…I’m not really sure I’ve got the answers. As I was originally writing this blog, I found that as I wrote I was moving more and more towards discussion of another contentious topic – competitive tendering. So today, while I continue pondering the impact of the client, this has segwayed into a consideration of the problems of competing tendering.

Often the project brief (or lack thereof) is the beginning of the problem. Whilst developing the brief can be part of the architect or interior designers scope, if it is teamed with unreasonable contract conditions or unreasonable interpretations by the client, significant additional work can be required. I have encountered contracts which expressly forbid the designer from claiming variations due to a prolonged program, limiting the number of meetings or site inspections or from an increased project value. This, to me is incredibly unfair on the part of the client. When the brief is little more than this – design a 5,000m2 fitout in a new building of 5 storeys to accommodate 400 staff in a mix of open plan and enclosed offices with support facilities. To me, the program and budget are key considerations in my scope, the scope is not just the final construction documents. Whilst it is true that the architect or interior designer could increase the construction cost due to design decisions, it is equally true that the client could increase construction costs and the amount of detailed design and documentation required due to their decisions on a higher level of acoustics or particularly extensive and complex joinery requirements as examples. I guess the decision has to be made at the fee proposal stage – do I take this risk of bidding on an very undefined scope and how do I (if possible) cost this into my structure. If the client then gets unreasonable in assessing variation claims, this is a recipe for cost overruns. In the end this kind of client should suffer with reduced quality for their project, but often they don’t, because we as designers still want to do a good job and keep the client happy. And our companies can often somehow think they will be able to make the money back on the next job, but in my experience its hard to make this work if you are dealing with clients who require competitive tendering on every job.

At the other end of the scale I have seen very detailed briefs, which (I thought) set out the clients full expectations of activities and deliverables. I responded to this detailed scope, pricing accordingly. We were even shortlisted for a tender interview. However, it turned out the client was interviewing all the tenderers (there were 3-5 selected tenderers) because there was such a large difference in the fee values (I think it was something like 200%) and they wanted to ask further questions of each party. I thought the interview went very well, but then we didn’t get the job. When we asked for a debrief, we were informed that we were offering a ‘blue ribbon’ service and that the client couldn’t afford this. So apparently the project had gone to someone with a much lesser level of services than they had put the tender out for, and a matching lower price. So much for fair tendering processes. If they didn’t want our ‘blue ribbon’ services, we should have been given the opportunity to price the same as the other company – or perhaps if they weren’t fixed on the services but on the outcome (eg the fitout) then they shouldn’t have specified all the detailed meetings, reports and the like in the tender. Very frustrating.

Although the tender process makes these things worse, even with more involvement with a potential client up front there is still no telling. Just like a job interview, it is a pretty brief time you spend with someone, where both parties are on their best behaviour. Later when things start to get even a little bit difficult or go wrong it could be a different story. Or it could be that the people change, or additional people get involved in the project. Having a user group that violently disagrees with the project manger/property person responsible for delivering the project can be a challenging process to work through for both the architect or interior designer and the client representative.

The most time consuming client I ever had, was one who used to pop into the office every single day for weeks at a time. She had decided to personally take charge of the colours and finishes. Whilst I wasn’t happy with that, the client organisation had agreed she would do this (I think that people thought it would reduce our workload! Little did they know…) If I told reception I wasn’t available she started to ask for the other project team members. She would then ask to come in and look at the samples library – but she wouldn’t just be doing this quietly on her own, the whole time she would be asking the opinion of whoever had let her into the office and they couldn’t get back to their own work. At the end of the project she sent back a removalist size carton of samples. We did actually end up charging the client extra fees, and thankfully in this case, the organisation was reasonable and recognised the additional work we had incurred due to the behavior of their staff member.

For me the problems is that these different client attitudes have costs attached and this time can also impact upon the project program. We have planned the project process based upon certain time periods, and its not always a simple matter of throwing extra resources against the project when the client requirements expand the time required. So how do we as an industry change this? We can’t always work for repeat clients that we know and understand, where we can somewhat predict their behaviours and expectations at the fee proposal stage. Particularly when it comes to competitive tendering we don’t have the opportunity to get to know the client. Or if we do know them, we might overprice the job or the opposite, we can win the job by offering a lesser level of service than the tender calls for. In my view, we as an industry need to take some responsibility for this. Architects and interior designers need to be less hesitant about defining scope and claiming variations. All architects and interior designers need to take responsibility for this, as often client attitudes are determined by the other architects/consultants they have worked with in the past. We need to educate our clients. But I also think that large client organisations, who purchase architectural and design services frequently also need to take responsibility. In particular, in Australia, government at all levels is a large user of architectural services, generally uses competitive tendering processes and frequently promotes one sided contracts. Clients need to understand their roles in the process and what has been allowed for in the fees. The staff involved need further support and education. Value for money does not mean cheapest. The conditions at tendering stage need to suit the actual project expectations. Client organisations need to judge project management success on more than just keeping consultant fees down.

If one of our largest clients (as an industry) treats architects and interior designers as not worth being treated as professionals with a high level of skills and value, what does that say about our profession? What is your experience – do you think competitive tendering offers the client the best outcomes? Do your clients understand that program or meeting attendance is part of the scope and can impact on your fees? What kinds of additional services have your clients expected without changes to your fees?

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Creative Commons Attribution 2.0 Generic License  by  Philip Taylor PT 

How many architects or interior designers does it take to design a building (or fitout)?

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Light bulbs No, that’s not the start of a joke comparing architects versus interior designers. And it’s just as applicable to engineers too. The question is really how do we determine how many hours it will take to design a particular project? I’m back to what seems to be one of my readers favourite subjects again – design fees. Last week a comment on my post on BIM-onimics queried the number of hours spent on some of the example projects. This question put me in mind of a number of issues I’d been meaning to blog about one day – the main one being how do you cost the client themselves into your design fees? To me this is often more difficult than the already difficult task of putting a number of hours on creativity.  However the more I started to think and write on the subject, the more it has expanded, and so this will be a 2 part post.

As I mentioned in my response to the comment on the number of hours a project takes, and I’ve discussed previously (in my post What makes a great workplace design client) clients come in many forms. I find particularly in the areas I of design I have worked in (workplace, healthcare, labs), the client group expects to be (and in my view quite rightly is) part of the design process. But that said, different clients at both the organizational and the individual level have very diverse views about what their role is, what their architect or interior designers role is, what deliverables should be provided, how many review points they should have, how frequently we should meet and generally how much involvement they will have in the design (and even construction process). The client’s level of industry knowledge and familiarity with the design and construction process also differs. All of these factors will impact on the amount of time I spend working on a project – not necessarily designing, but managing the client inputs, reviews and approvals, answering their questions and producing documents which are specifically for their use and not a requirement for construction.

I don’t necessarily mind doing any of these things. The problem is that if I don’t know the client (and by this I mean both the organisation and the individual) at the fee proposal stage then gauging what kind of client they are and what their expectations might be can be exceedingly difficult, and in some cases downright impossible. If you’re lucky you have a client who is only seeking proposals from  a small number of your competitors (or even better you are single select) and they may meet with you once or twice to discuss the project. You have a chance to speak directly with them to clarify the scope and their expectations. It may even be likely that if there was an obvious difference in scope between the proposals the client would come back to you to discuss this. Unfortunately, in my experience this has not been the norm. Maybe in some sectors and firms it is, which is great (give me a call, I’d love to come work with you!). Particularly when dealing with government or large institutions or organisations, competitive tendering becomes a more usual approach.

Even on an invited or short listed tender with a limited number of companies it is unlikely that there will be any significant interaction between the designers and the client representatives. Whilst a site inspection may be held, this usually involves all tenderers and doesn’t really provide an opportunity for the designer to get to know the client. The first time this is likely to occur is after you have submitted your fee, at a tender interview. Indeed for some larger open tenders, there is never even the opportunity for the architect or designer to speak to the client. The only means of contact may be via an anonymous procurement email address, with the whole tender process run by a different individual than the person who will be the client representative.

Especially when the person who becomes the client representative in the design stage has had very little involvement in procurement their expectations can differ markedly from what is documented in the tender and project brief. Individuals can have very different views over what constitutes a review or approval and how the design should progress. With some of my clients I know that if we have a meeting and I present some preliminary design options, I will get instant feedback and go away straight after the meeting to revise and develop the design. However with others, the decision makers are not in the room or further people need to be consulted, I will be lucky if I get feedback and direction 1 week later. These two scenarios affect my resource planning and my project costs. Design is not just dollars per hour, every time I start and stop it costs more. There is also the likelihood that during the time the client is reviewing the schemes they will have more questions, will ask me to explore more options and that overall there will be more meetings and the project will take longer. Now, I can and do try to reduce my exposure to such risks by including a detailed scope and program, limiting the number of meetings and options and other such assumptions within my fee proposal. But still, a number of scenarios have arisen for me in the past where for a wide variety of reasons other issues arise which further complicate the potential project costs or reveal interesting things in relation to the expectations of the client.

Tune in again next week to find out more about some of these issues, a discussion of competitive tendering and my opinions on what needs to happen to help sort out this mess!  In the meantime, feel free to offer your own stories, suggestions and comments.

PS. My TEDx video is now available on line. Click here for the Audience Talks. I’m at around 9 minutes of the way through.

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BIM-onomics: How will BIM change the business of design?

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Money by Tax Credits, on FlickrDoes BIM cost your design practice more? How does BIM impact your fee proposals? How does BIM impact your business? These were some of the questions I was recently asked to address in a presentation at the Revit Technology Conference held in Auckland.

Partially as a result of my previous blog posts Architecture and Interior Design is a business, isn’t it? And The art (or is that science?) of architecture and interior design fees, I was invited to address the topic of the economic and financial impacts of BIM on a design consultancy – I think due to being among the relatively small group of industry professionals who understand both BIM and the business of design. I convinced another such individual Rodd Perey – committee member of RTC Australasia who had invited me to do this talk – as well as Principal and Group Design Technology Manager at Architectus, to join me in discussion of this topic.

One of the most interesting things about preparing the talk, was that whilst Rodd and I come from very different practice and BIM backgrounds, much of the time we agreed on the issues affecting a design practice who are using BIM by themselves and for their own benefit. We termed this Lone BIM – as opposed to the benefits of using BIM as part of a larger project process in conjunction with clients, sub-consultants and contractors. This Lone BIM, the efficiencies and impacts on practice, and its opportunities for reducing project risks, were the focus of our talk.

I have attached the slide deck to this blog via Slide Share.

BIM-onomics slidedeck from Ceilidh Higgins

As you will see from the slides, one of the repeated messages was that practice directors, principals and anyone costing or managing design projects need to firstly understand what BIM is actually being used and produced in their office and secondly what BIM outputs will be delivered to the client. How can you calculate your fees if you don’t understand your deliverables?

Right now in the industry and even within individual practices BIM can mean different things to different people. It’s important to understand which BIM deliverables and processes are additional services outside traditional services, and which ones can help you improve your efficiency in providing traditional services. To model every part if a building at 1:1 with full operational and facilities data will certainly cost you more than traditional documentation, but is that what the client has actually contracted you to deliver?

We felt that there were a number of key aspects to using Revit (or other BIM software) within your practice that improve your “BIM-onomics”. Aside from understanding what BIM you deliver, you need to leverage the information and automation aspects of the BIM – for example scheduling, keynoting and proper use of materials which allow consistency and automation across the project. Directors and principals need to have some understanding of these concepts so they can question the outputs. However its not all about BIM either – continuous improvement, ongoing training and debriefs are necessary to capture and spread the learnings across your organisation. This needs leadership.

Then we get to really the key thing – BIM impacts all areas of your business delivery model. BIM impacts upon your project workflows, your resources, your programs and your QA. Are these things you are just going to leave to drafters or modellers? You can’t leave your practice to the “revit robots” nor can you buy in the revit “A team” to solve your BIM implementation problems (though it will help). Economically successful BIM relies on the knowledge of your team, the mix of knowledge between software, design, construction and business. Everyone is part of the BIM team. The senior architects and managers may not be on the tools, but need to be able to speak a common language and communicate with someone who can understand both the BIM and the business. Someone needs to direct the BIM process to ensure that over modelling and over servicing is not occurring, a common reason for cost overruns on BIM projects. But one that is more typically related to management practices than the BIM software itself.

BIM will change your project programs. As Rodd pointed out though, that most overused of conference graphics the MacLeamy curve is wrong – what consultant in their right mind would sign up for a process that makes you do the same amount of work earlier in the process, when the client is still most unsure? Both of us agree, that whilst BIM does put some of the workload forward, it will be overall less work – and the project examples we used demonstrated this (the graphs come up later in the slide deck).

Your quality checking procedures also have to change – again this isn’t one for the junior revit modeller in your office is it? But it is another opportunity to leverage your information – you can use BIM to check your BIM. Examples shown include using auotmated drawings to check precast panel details and smoke/fire compartments. The more uses you can find within the BIM itself the more valuable the BIM becomes. The BIM becomes also a risk reduction tool – you get in right during design and spend less time on site, you think things through and solve problems in the design phase. But again senior and experienced project staff need to be part of this process – they need to know what is possible with the BIM, and then they should be asking for it in their own offices.

Both Rodd and I presented a set of comparison projects with an analysis of an AutoCAD project versus a Revit project. Unfortunately it is impossible to ever directly compare 2 projects as every design project has different factors, but we both selected the most similar projects we were able to find. In Rodd’s case, 2 hotel redevelopment projects on the same site for the same client, and in my case 2 office fitouts of a similar size for similar client types. As you can see on the slides Rodd and I examined slightly different project metrics based upon the information we had available. The one metric in common though was the percentage difference between the number of hours and the number of drawing sheets. We both proved the Revit project to be significantly more efficient based on this metric, and amazingly we came up with figures within 5% of each other!

A question from the audience worth repeating here, was how long had the teams been using Revit? For both Revit examples it was between 2-5 years, and it was certainly not a case of having a super BIM team and a crappy AutoCAD team – both myself and Rodd considered the teams also to be comparable. To get a good return on investment isn’t going to be an overnight process.

BIM is a process you need to manage the whole way through your projects – right from fee proposal stage. Its pretty straight forward really…define what you are providing, what others are providing (such as point clouds, parts of models/existing models, BIM standards) and understand what you are costing. If you as the person costing a job don’t understand all the technical aspects, talk to someone in your office who does. Build the understanding between the technical people and the business people – or find people who are able to do so and bridge the gap, becoming the translator and teaching at both ends of the equation.

In conclusion – does the BIM-onomics stack up? If you manage the process, manage the risk and are delivering the same it should cost you less.

Do your BIM-onomics stack up? Do you know by comparing projects? If your BIM is not yet economic, what are the challenges and issues you see as stopping it? If you are a practice director or principal do you know your BIM? If you don’t, do you have someone who can translate for you? Have we missed any factors you consider critical to the economic success of BIM in your practice? Do any of my slides not make sense to you? (if so comment)

You can find my other RTC presentations – What’s in a Room and InforMeDesign on Slideshare.

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