The Value of Architecture

Rachael Bernstone , 1 September 2021

Rachael Bernstone of Sounds like Design connects the wellbeing of architects with fee-setting and communicating the value of architecture.

In the Monash Work Cultures & Wellbeing survey, one of the final questions asked respondents to nominate one thing they would do to affect the wellbeing of architects.

For me that’s easy. It’s about refusing to work for free. Full stop. That goes for students, business owners, employees, interns and everyone else in the profession.

In my response to that question, I said that the late-nights, unpaid overtime, the mentality that architects should over-service-every client-and-project – which extends to producing tenders for free! – starts at University. This has the (unintended?) effect of excluding some students from the course, because of the high workload that doesn’t allow for much in the way of external employment.

I also suggested that Super-Studio-type competitions – which take place over a whole weekend and promote this hot-housing atmosphere – need to be canned. Pronto.

How does this culture manifest in practice?

When I’m talking to clients about business strategy and marketing, a lot of them tell me that they “over-service” their clients. They spend longer on design or documentation than the fee allows, whittling away their profit in the process.

This is a topic that’s not often publicly discussed, but Warwick Mihaly wrote a great series of blog posts on how he determined where the profit was leaking out of Mihaly Slocombe, and what the practice did to address that.

He also spoke about it at the ACA’s BoSP in Perth, and you can read the article I wrote about it here.

Another problem that often occurs alongside this tendency to work for free is the race to the bottom on fees, with practices undercutting each other in order to win work (in some cases, to take over projects started by architects with higher fees).

This kind of predatory fee-setting may work in the short term to win the job, but it has two impacts over the medium term to long term:

1. the client you won by reducing your fee won’t value your work at its true worth, making it difficult to increase your fees on any subsequent projects; and
2. the poor perception of the value you provide can contribute to scope creep, meaning that your fee for the project is eroded even further.

In short, this practice of fee undercutting has a highly negative impact on the entire profession in the long run, because it devalues the contribution that architects make to the process and outcomes of delivering good design.

To me, all of these issues speak to the need to better communicate the value of architecture.

A Twitter thread I spotted recently (thanks Laura Harding!) spelled this out beautifully. US architect Marilyn Moedinger said: “I hear architects say, but the market won’t support higher fees! Hellooooo, we are part of the market – if we run our industry into the ground on crappy fees and exploitative employment practices, we won’t be here to do work anyway.”

You can read the full thread here.

So what can you do to address this issue?

If you want to explain your value to clients – and charge commensurate fees that cover your costs and allow your practice to make a profit (to ensure your business is sustainable and foster employee wellbeing) – it’s important to articulate and communicate your value to people who don’t yet understand and appreciate it (which includes most of your prospective clients, and the public more broadly).

One of the main issues with this topic of value is that there is not a lot of research about contribution of architects to the three key bottom-line criteria. I know of just a few measures of financial value:

• MIT conducted research that put a figure on the financial performance of awarded architectural design for commercial office buildings in Manhattan, New York.“The result of the hedonic analysis suggests that buildings designed by awarded architects/firms are transacted with a 23.1% premium than buildings that are designed by non-awarded architects.”
• Research out of Melbourne University identified a consumer premium for energy-efficient homes in the ACT, where the regulatory framework has created an informed market and a level playing field. That research found that:“Compared with three-star properties, properties rated five and six attracted premiums of 2 and 2.4 per cent respectively. But properties that went further on energy efficiency to gain a seven-star rating attracted heftier premiums of up to 9.4 per cent.”
• There is also ArchiTeam’s RAsP research, compiled in 2020 and currently undergoing peer review. It reported that architect-designed home renovations in Melbourne delivered a return on investment of $11.40 for every dollar spent on architectural fees, in capital appreciation. The study found that:“For the median Melbourne house price of $1,200,000, after 10 years the home owner that employed an architect is $256,000 better off than the home owner that didn’t.”

There are other ways to measure the value of architecture too, such as social value, which is especially relevant for public, civic and commercial buildings. You can find the RIBA Social Value Toolkit from the UK here.

In Australia, Deloitte used both social value and financial measures to quantify the contribution of the Sydney Opera House to NSW. The Deloitte report – first published in 2013 and updated in 2018 – found that:

“The social asset value of the Opera House has increased to $6.2 billion since FY13. Visitation has also increased by 33% to 10.9 million, while the economic contribution of the Opera House rose by 44% to $1.2 billion since FY13.”

Lastly, environmental value will become more prominent as governments introduce tougher regulations around embodied and operational carbon for new and existing buildings, to tackle and mitigate climate change.

Life cycle analysis is not widely practised yet, but it will be in future, and it’s a very useful way of measuring both the carbon and the value of good design more broadly

So how do you identify and articulate your value?

There are many ways that you can define the value you provide to clients. You may have to go through your project financial reports to find examples, or read client testimonials, or conduct surveys of past clients, or employ the Social Value toolkit developed by RIBA.

You could ask the following questions to help define your value (bearing in mind you may need to refer to several measures to fully capture all the value you provide):

• Have you quantified the money you’ve saved your clients during construction?
• Or the premium they achieved at the point-of-sale because they’d invested in good design?
• Have you measured the intangible value of living in a beautifully designed and customised space? (see this list by a client of Philip Stejskal Architects)
• Or do you have another set of metrics that defines and measures your value, and which helps you to clearly articulate that to future clients?

If you’re not sure what sets your practice apart from others – or how to articulate your value to your future clients – it’s hard to attract the kind of clients who will provide your practice with a sustainable and profitable pipeline of projects.