Investment Needed in Civic Projects & Social Housing
ACA – Vic/Tas President and FFPV Director Paul Viney reflects on his experiences with past and present economic downturns, the need for more government investment in civic projects and social housing, and the challenges of COVID-19 and remote working.
In the lens of COVID-19 and its impact on the industry, what is your previous experience of going through downturns?
We started our practice, FPPV Architecture, in the 1987 recession. It was probably the worst possible time to start an architectural practice. We had interest rates of 17% on our lease equipment (such as the computers). We had four directors and no staff and we were wondering what the hell we were doing. The timing of our start-up fundamentally framed a financially conservative business.
We’ve always seen the industry as cyclical. There are times that are extremely busy (such as the past five years), when things get overheated and prices rise; and others that are extremely slow, when prices drop down to reasonable levels. The GFC in 2007/2008 brought some positive things in the construction industry with the BER, but it also pushed prices up on all fronts, particularly the trades. I don’t think we’ve ever really caught up to it. The hourly rates being charged on construction projects are quite extraordinary. There is virtually no employed architect in Melbourne earning the equivalent of an unskilled labourer or traffic controller on a construction site. That’s how out of whack the system has become.
We framed our business based on the areas of the economy that are most resistant to recessions, Institutional, Government and Education. In times of recession, the government sector is generally one of the only sectors where money is spent. In the good times, everyone does the private work. In the bad times, the government is where the money is spent. We made the decision to specialise in doing government projects, which is what we’ve done for the last 25 years. While no-one is recession-proof, it means that when the cycle is really severe, we have a much shallower cycle to work through.
Of course, the whole profession can’t work in the government sector. But that’s how we’ve got through. We have developed our business model around these principles. In real terms, through the GFC, we didn’t have to lay off a single staff member – in fact, we did the opposite, because we formed a joint venture during that period with Daryl Jackson Architects and worked on 320 schools during the BER.
We took key members of our staff out of our office and put them in the joint venture. We basically made sure that every current client we had was being looked after by the remaining staff in the office. We actually involved six or seven practices, mostly from other ACA committee members, to work on projects with us in the joint venture. We managed the projects, keeping them under our umbrella, but we gave them a geographic basket of work of, say, six schools. So, we would share the work around under the joint venture umbrella. We ensured that everyone had a fair deal, because some projects were always going to be more profitable than others. That’s why we bundled up projects into baskets, with some more profitable projects and others that weren’t so great from a profitability point of view.
At one stage we had 53 architects working on the project. We had the joint venture going for about six or seven years, and it worked well. It’s part of the reason why we developed the new ACA Resource Sharing Tool; it assists what has been happening on a small scale amongst practices for years. We’ve seen these kinds of arrangements work very successfully for us in the past.
What do architects need right now?
There have been some ideas floated around recently. There’s the proposal for a 5% contribution by government to all architectural fees – something like Archicare rather than Medicare. I’m against these types of approaches. How can Government be seen to be funding architects to work on developers’ projects who are only going to make further profits at the end?
For me, what they need to do is to spend money in the building industry on civic projects… What’s happening currently in Victoria is that the government is putting all the stimulus into infrastructure projects – railway crossing removal, tunnels, and roads. We need a more balanced approach that includes more money being invested in schools, hospitals, police stations, museums and galleries – civic buildings that will have long-term benefits for the community.
What’s happened in our state is that the government has deferred the budget from May to October. Traditionally, the May budget is a very important budget; half the architects follow it closely to see what new schools are going to be built, what new police stations are going to be built. Then they’ll make approaches to government to be considered for those projects.
Now, we’ve got a six-month hiatus between projects being announced, and that’s a six-month work stoppage for a lot of people. We recently did a ring around of every ACA member in Victoria and the general feedback was that we’re ok for the moment. Some projects have been brought forward. But the real concern was five to seven months’ time.
Many have said that the architect is the canary in the coalmine. If we’re not drawing now, where’s the construction industry in seven to ten months?
I think the best way forward is for the government to put money into quality civic projects, whether that is at a municipal level or a state government level – but to build now.
There were a whole lot of issues with the BER. There was a template approach. There was a list of buildings to choose from, and it wasn’t really considered whether a school needed that particular building or not. But the government was trying to get money into the economy fast. Unfortunately, what it did was overheat the market, with glass, roofing, windows, plastering – all the prices went through the roof. Then that money was wasted and didn’t get to where it needed to go, and we didn’t get the best outcomes. One important lesson that was learnt from the BER was that for projects of this type the best value for money was clearly achieved by the traditional delivery method of fixed lump sum contracts, designed, documented and administered by architects. In many cases it indicated up to a 40% improvement in value for money.
Today is an opportunity. We’ve slipped behind the world and in some cases the rest of Australia, in terms of quality government buildings and here’s an opportunity to re-establish ourselves. Do more civic projects down near Southbank, where all the galleries are. The Spotswood Science Museum may be ready to be replaced, but there’s no money for it. All those sorts of projects are the big-picture stuff that the private sector is never going to do. These are the projects that governments could be and should be doing. I know that the government is caught up trying to keep things running at the moment, but that’s where I think the money should be spent, and the architects have a big role in that.
Could renewed investment in social housing be part of the recovery?
In my view, there is a real flaw in the conversation around social housing. Historically we’ve built vast estates of social housing, where you put everyone with social disadvantage in the one area. This approach reinforces the problems. To just go and build 12,000 social houses and put people with limited means, limited resources and limited education in the one spot doesn’t work.
Just by background, after the Burdekin Royal Commission into youth homelessness, I chaired one of the local area task forces for four years. We were looking at innovation-related programs to alleviate homelessness – it became clear that building lots of walk-up houses doesn’t solve the problem. It changes the problem, but it doesn’t solve it.
One of the guys here at FPPV has enormous experience with social housing, as he was the project manager of the Carlton redevelopment. This large development was created on the basis of maintaining or extending the amount of social housing opportunities, but not in the same uniform way as we have with the estates. The plan for social housing was to introduce a combination of tiers of affordable housing – market housing, social housing, all within the same complex. By doing that, you provide a socio economic range of residences with aspirational and employment opportunities. Kids from different backgrounds are mixing together… They’re not all from poor migrant backgrounds. Residents are able to mix with a broad range of people.
What the Carlton approach does is to get a better level of density and a better use of land in the area. It also upgrades the value of properties. Many of the underground carparks in the estates had been closed down, because they were considered so unsafe. You had broad acres of unused land as forecourts to those buildings. We know that there are at least 10 of these sites still available to redevelop. There’s Richmond, Northcote, Flemington, Beacon Cove, Collingwood … some smaller ones. The marketplace can’t absorb all of them at once, of course, but to move on the next one of those integrated housing redevelopments now would be very smart.
The government is running slow on these kinds of developments, because their priority up to now has been major infrastructure – the railway crossings and big projects like the tunnel. I believe it’s time to get two or three of those housing projects going – to use that tier structure of accommodation to fund new, good social housing. It’s a really smart way of going about things.
What has been your experience with the economic downturn this time around?
Early on, projects were being put on hold and we put everyone on four days a week. We sat down with every member of staff in the front room and said, we’ve got some decisions to make. We can do one of two things. We’ll leave it up to everyone to tell us what they think. If you disagree with our suggestion, come and see us personally. We know there’s going to be a work drop-off. Everyone’s starting to get nervous. Will I have a job? Will I not have a job? We said that we want the practice to survive and we want to come out the other end with the practice intact, which means that everyone still has a job. The only way we can do that is to share the load equally, from the Directors to the graduates. Everyone has moved to a four-day week, myself included. If we have to go to a three-day week, we’ll do that.
We did have to stand down two people, but we made sure we called them a couple of times a week to make sure they knew what was happening in the office and to check in with them. Once we qualified for JobKeeper we were able to re-employ these staff and fortunately we have had sufficient work to keep everyone busy.
The problem is we still don’t know the duration that JobKeeper will be available, and there are some significant anomalies with it. If you work in an office one day a week, or you work for an office five days a week, you have to be paid the full $750 a week. So, that means someone working one day potentially gets the same income as someone working five days under JobKeeper. It’s challenging.
One thing we did say early on was this is an opportunity. We’ve actually been very busy (and everyone’s been very busy) for the last five years. So, this is an opportunity to take a deep breath and say, “What are the systems that can be improved? What are the things in the office that we can do? What are all those things that we’ve been meaning to get to for the last five years that we haven’t had time for? How can we actually make improvements? What new technology should we consider?” We’ve had one person who is working virtually full-time at looking at technology opportunities. It’s a good time to see what opportunities there are for the future, and what technologies can support us. How can this be a better place to work and how can we be a more productive and efficient office when we come out the other end?
That is the way we presented it to staff. This is what we’re doing. Everyone in the office accepted the move to the four-day week. We did have situations with staff that have different home circumstances, with vulnerable people at home, and could not risk becoming unwell. We just said, “Work from home. That’s fine. We’ll work around it.”
The thing that I’ve learnt is that you can’t have a singular rule. You can have a set of principles, but then you have to ask, “How can I manage this for each individual person and each circumstance?” How can I be, and be seen to be, fair across the board? You have to be really transparent with everyone. It’s amazing how quickly people accept things when they know exactly what’s going on. It’s then no issue at all.
What is your experience with remote working so far?
We have struggled a bit with the challenges of remote working. You can do task-based work remotely, no problem. But architecture’s a collaborative profession, and if you have four people working on a project, and they’re all working remotely, you miss the incidental conversations – the “have a look at this, what do you think about that?” discussions. Everyone has their own level of expertise and experience. Trying to get that cross-fertilisation of ideas doesn’t work very well on Zoom or Microsoft Teams. You need to sit there with a pen and paper, and work over it. That’s what I’m struggling with. How do you manage to still maintain QA when the processes are completely thrown out the window, because you don’t have everyone around the table at the same time? How do you manage the resources of who’s doing what. I know some people are ringing their employees at 9am in the morning and again late in the afternoon, but if I was an employee and my boss was doing that, I would think that they didn’t trust me.
So, I sat everyone down, and I said, “We’re starting on the basis that there is not one person here who we don’t trust.” But then, how do you get a relative balance of keeping in contact without appearing to be like Big Brother? I don’t know the answer to that yet.
For us, it’s a real work in progress.
The feedback that we’re getting is that the productivity loss is significant – 20% to 50%. It’s not because people are not working hard. There’s a whole thing around the psychology of this as well. It’s almost like stages. The first week you get one response (you’re feeling a bit relaxed, you’re feeling quite comfortable, it’s almost like being on holiday). The second week you get a different response (I’m starting to feel a bit disconnected). And the third week there’s a different response again (Am I really needed? Do I need to come back into the office to prove myself?). And you find some people are responding by working excessive hours. It’s difficult. How do you separate home and work?
I worked out a long time ago that I’m not very good at working from home. I have a theory that when I leave work and turn the key to lock up, there’s nothing I can do now until I come in the next day. I silo things. But when I’m working from home, I find it extraordinarily difficult to cut off and do the silo. There are many people feeling the same way.
I spoke to one organisation who said they were getting a 20% increase in productivity with their staff all working from home. But the difference is that they’re all millennials. None of them have kids, none of them have family. There’s nothing else for them to do, so they’re working 12 hours a day. But that’s not sustainable. And they’re worried and want to know how to stop the overworking, because they know it’s going to burn them out.