This message has been cross posted to the following Discussion Forums: Project Delivery and Practice Management Member Conversations .
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Several points have been made regarding the trend in architectural practice toward shifting and avoiding risk, and the effects of that trend which include relinquishing control of the project implementation and cost management, which in turn diminishes the architect's role in the process as well as their apparent value to the client. Many have voiced resistance to giving up the leadership role in documentation production citing concern for reduced fees. I think I can contribute an idea here that was an important lesson I learned in business school which I don't believe I would have ever learned in architecture school nor professional practice, and that is.... that more hours and more fees does not mean more profit, necessarily. Because of the way most professional service firms contract and bill for their services, this connection is typically considered to be a foregone conclusion, but if we can imagine a new business model for architectural practice, this coupling of fee and production is not necessarily a paradigm.
The typical business model for medium to large firms essentially leverages the design ability, contacts and experience of a principal, or few principals, to win contracts which include document production and project management type services. The employees who "do the work" are then compensated at a level that is, on average, less per hour than the fee charged to the client when divided by total hours spent on the project. In essence, the profit is in the production and management, which is done by the employees. The principal's time may be more per hour, but far less hours, so, in total, far less profit. It is no wonder firms will resist losing production of documents to others such as builders and contractors.
We have learned to equate hours with profit, not necessarily the case.
The production of documents is becoming less and less profitable as this service is becoming more commoditized, and as other parties outside architectural firms are having more and more direct input into it. So the question is, where will profit, not "hours" come from in the practice of the future?
Principals, and in fact all architects are taught that they serve a higher purpose than profit and business, both in school and in early practice. This purpose requires that they serve in an almost zealous manner, the gods of good design (whatever that may mean). Those who are most committed will sacrifice their time, their families, their emotional energy, their own wellbeing to "serve." Self-interest is beaten out of us, and those who resist this beating are cast aside from the profession.
This culture has worked well, to this point in time. This self-sacrifice has lead architects to become the principals who's experience and ability is then leveraged for profitability in the architecture firm business model. But suddenly the pot of gold at the end of the rainbow is shrinking, quickly, the payoff for all those years of sacrifice to get to the top no longer has the luster that it once had either in financial reward nor in respect or admiration.
So what is the answer? I see two potential paths. The first is to continue the trend away from risk and away from commodity. That means specialization. Developing specialized skills and services that can bring higher than standard fees for consulting type services, not document production.
The second is integration. Becoming part of a machine which designs and builds in a collaborative process which operates under a single corporate umbrella (not an IPD team, but a single corporation). This type of firm would be a turn-key type of operation, both documenting and constructing.
We can argue over whether or not to give up document production, as a profession, but like many subjects discussed in these blogs, we are suffering from delusions of grandeur to think that we can stop it. It is happening and we cannot control it. Best to take care of ourselves individually. But then I know that that is sacrilege in this profession.
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Alan Burcope AIA, MBA, LEED AP
VP Project Development
HBE Corporation
Saint Louis MO
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