Is Everyone Experiencing This Right Now?
Design fees, scope creep, government projects: Alexandra Howieson reflects on the state of the nation.
As architects, we often find ourselves asking, “Is everyone experiencing this right now?” Whether it’s a lack of work, or an abundance, difficult negotiations, or a shift in project type, when we notice trends, wonder if that it is being experienced by other practitioners in our local area, state or nation, or if it is peculiar to a particular practice.
As a consultancy, Blue Turtle Consulting has the privilege of being able to speak candidly with a selection of architects and related design professionals across Australia over the course of one week, every six months. This provides a great opportunity to gain a keen insight into the perceived trends, fears, hopes and challenges across the profession in Australia at that point in time. It gives us a sample snapshot of the profession’s mindset.
Blue Turtle Consulting delivered their most recent series in mid-November 2014. During that week, we noticed a number of trends – some are quite expected, others somewhat surprising:
1. We’re doing more work for less
Many architects report that the amount of work required to submit an application for development continues to increase. This was reported across all states visited. While more work is not inherently a problem (quite the opposite!), client fee expectations meant that the majority of practitioners also described struggling to increase their fee levels commensurate with the increased scope. This was particularly evident when working with developer clients who have clear expectations for how much they ‘should’ spend for a certain type of service.
One important inconsistency in this trend was residential architects. This group reported not experiencing the same difficulty increasing their typical fee levels from project to project. Did this opposing trend surprise us? Not really. Residential clients are, by their very nature, typically one-off clients: they tend to only engage an architect once and, should they require future design services, the scope of the project is usually quite different. As such, they don’t have the price anchors that tend to influence developer clients.
2. We’re doing more government work
This was an observation that came up in most states but was particularly notable at the Perth Fee Proposal Workshop. One practitioner reported that his firm (a large national firm) had gone from having approximately 30% of their projects coming from government clients, to receiving around 80% of their commissions from government clients. While this is the observation of only one firm, it was not an uncommon sentiment in our workshops this season.
This trend leads us to ask what this means to our industry. More RFPs coming from the government sector is not a bad thing, however, architects should be cautious for two reasons. Firstly, government bodies are required to seek multiple proposals for every project. This means that your chances of winning the work will usually be lower than when bidding for private projects. Secondly, proposals for government projects are extremely rigid when it comes to scope, fee structure and payments terms, and the documentation required to submit a proposal is far more rigorous than for private clients. This equates to more hours dedicated to a higher-risk potential return.
It’s also worth noting that the format of most government proposals gives architects little opportunity to differentiate themselves from their competition – other than on the fee. While the firm’s experience, personnel, design process and QA procedures are all considerations, it is paramount that government bodies are responsible with the public purse strings – fee will always be a driving factor.
3. There are just too many architects
It’s no secret that our industry is a competitive one – for many reasons – but one reason is the sheer number of us. When comparing the number of registered architects in Australia to the USA, there are 25% more architects per capita in Australia than the United States. This statistic is reflected in the observations of the architects who attend our workshops, particularly in Melbourne. One Melbourne-based architect said that he was considering moving interstate to improve his chances of winning more work.
4. There is more enthusiasm for multi-disciplinary proposals
This was something we noticed mostly in our Sydney Workshops. Many architects and other related design professionals reported increased success in the fee proposal process when offering multi-disciplinary proposals – across the board. It seems that all client types appreciate the opportunity to have multiple components of their projects handled by one team, even when this team does not routinely operate as one organisation/company.
5. We’re getting mobilisation payments!
The last trend we noticed is a very positive one. Blue Turtle Consulting first started delivering nation-wide seminars and workshops in Australia at the beginning of 2012. At that time, the term ‘mobilisation payment’ was largely unheard of – or the concept was scoffed at. It seems the tide is now turning: each series we deliver around the country (every six months) sees an increase in the number of architects requesting and, more importantly receiving, mobilisation payments. One architect in Perth even reported that, during a phone call he had taken in the workshop lunch break, his client had offered him a mobilisation payment - without the architect making any request!
On the topic of trends in the industry, it is also worth noting a couple of trends that we never observe. Despite having completed several workshop series around the country, we have never observed a nation-wide, industry-wide lack of projects or, conversely, an abundance of projects. Nor have we observed consistently low fee levels, or high fee levels. Even when trying to track trends within states, cities or project/client types, there appears to be little consistency on these matters.
The one consistency we do observe is, in fact, a lack of consistency. Within every workshop, one architect’s experience or observation of a trend (be it lack of work, abundance of work, lower or higher fees than usual), will be countered by another practitioner within the group who has observed or experienced the opposite trend.
Does this mean that we architects are just an obstinate, argumentative bunch? Blue Turtle doesn’t think so. We think this has more to do with the fact that the climate within which we practice is constantly changing and each individual project on which we work is also in a constant state of flux – and can be affected by the most obscure and unlikely of factors. This sounds like we’re forever doomed to practice in a fragile fraught environment susceptible to explosion or implosion at any second. However, it’s not such a dim picture.
Blue Turtle’s advice to navigate this environment is to diversify. Putting all one’s eggs in one basket means that that basket has to be infallible. All market sectors and regions in Australia are susceptible to fluctuations and, as such, are fallible – beyond our control. Further, each client or project type has its own set of advantages and disadvantages.
The easiest way to inject an element of stability is to spread your eggs among many baskets. Diversification can be achieved in many ways, and it needn’t be as labour-intensive as many believe. Whether through company structure, joint-venturing or simply the structure of your fee proposal document, applying a diversified approach to your practice will avoid reliance on any one client, project type or region and pave the way for a more stable practice environment.
Alexandra Howieson is a registered architect and design fee consultant at Blue Turtle Consulting.