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The Practice Management Knowledge Community (PMKC) identifies and develops information on the business of architecture for use by the profession to maintain and improve the quality of the professional and business environment.  The PMKC initiates programs, provides content and serves as a resource to other knowledge communities, and acts as experts on AIA Institute programs and policies that pertain to a wide variety of business practices and trends.

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Firm Capacity

  • 1.  Firm Capacity

    Posted 04-20-2018 09:59
    Good Morning Everyone!  I have been asked by one of our firm's most valuable clients to quantify our firm's capacity to provide services.  The client is ramping up a significant building project that will result in 2x-3x the amount of work we have consistently executed for the client in the past.  I am doing research to see if there are any industry accepted methodologies of estimating a firm's capacity to provide services.  But, so far, I have been unsuccessful.  Does anyone in the community have any resources they can point me toward that might could help?

    Methodologies I am currently looking at include estimation of capacity using total billable hours of our staff compared against the estimated fees associated with the upcoming projects on a yearly basis.  I am also looking at average yearly revenue of the firm over the last 3 years as compared to the estimated fees associated with the client's upcoming projects.  I think both of these metrics are logical; but, I would love an outside resource that I can present to the client that justifies my methodology as an industry accepted standard and not just my own.

    Thanks for your help!

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    David Donovan AIA
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  • 2.  RE: Firm Capacity

    Posted 04-23-2018 18:48
    David, in addition to previous comment sent to you directly, I also believe past revenue generation that represents the firm's ability to take on that amount of additional work would be a decent indicator of your firm's capacity to handle more projects.   

    I would also add a clarification, that unless your firm invoices on a hourly basis, there aren't any 'billable' hours, just 'chargeable' hours.

    Regards,
    Steve L. Wintner, AIA Emeritus







  • 3.  RE: Firm Capacity

    Posted 04-25-2018 07:27

    Your history of successful service should be described. What has been your approach?

     

    What is the scope of the project and schedule?

    Who are your key team leaders and supporting staff?

    What are their commitments and how do their commitments synchronize with this project?

     

    Unless the project is very large, no one in our office is 100% committed to a single project.

    We overlay the schedules and make adjustments accordingly.


    Larry Fischer
     

    AIA, ACHA
    Managing Principal

                                          

    Perspectus Architecture

    13212 Shaker Square

    Cleveland, Ohio 44120

    216.752.1800     (c) 216.870.6190

    www.perspectusarch.com







  • 4.  RE: Firm Capacity

    Posted 04-26-2018 14:24
    Hi David -

    This is a common question from clients with major projects, and it often shows up in RFQ/Ps.

    The way I prefer to answer the capacity question is to show a list of current projects by phase and include the size/scope and staff associated with each. Ideally, you would be showing several projects in the CA phase to demonstrate upcoming capacity in the near future.

    You could also work backwards from the potential project's milestones (at kick-off, or for any ramp up of staffing for SD/DD/CD) and show each staff person's availability at those points in time.

    Hope that's helpful.



    ------------------------------
    Abigail Carlen LEED AP BD+C, Assoc. AIA
    Owner / Principal
    Turquoise Marketing
    Portland OR / Brooklyn NY
    ------------------------------



  • 5.  RE: Firm Capacity

    Posted 04-27-2018 18:08
    It is sometimes helpful to step back and look at things from the 30,000 foot level.  It is not unique for a firm to consider taking on a project that exceeds (or can eventually exceed) its capacity, based on existing staff resources and taking into account that the firm likely has other projects it will need to deal with concurrently.

    However, there are inherent concerns with assuming the firm will be able to 'ramp up' its staff.  It can be especially risky if promises made to a potential client are based on certain assumptions:  that there will be talented/experienced people available for hire, given market conditions that will prevail when you are given the green light;  that the available individuals will have the appropriate experience/skills/knowledge/training for the specific project being undertaken;  that the properly-skilled and available workforce will be available at the predicted salary level your proposal was based on;  that new hires will prove out to have the technical skills and production efficiencies they claimed during the hiring process;  that new hires will be efficiently integrated into the practices of the firm, and will not drain senior staff/management;  that the learning curve during integration goes smoothly and that the new hires turn out to be a good fit, and not changed out for a second wave;  that ramping up is feasible given physical facility constraints and administrative/management capabilities;  and other wide-ranging issues.

    The dangers of stretching beyond known capabilities are multi-faceted.  The work can consume more time and cost than presumed, based on experiences with smaller projects and 'known' staff members - leading to any number of disputes (internally and with the client).  The work may not be up to the firms' usual standards (promised to the client) either due to staff that are not as skilled as initially thought, or to the inability of senior managers to properly oversee the expanded efforts with the same level of diligence ordinarily exercised.  Because the firm does not have prior experience with the new staff, senior managers may not know what to expect with respect to quality of work products - and if it turns out there are problems, efforts may have to be duplicated.   Working with new staff, on a project that differs from past experience, and requiring higher levels of oversight, can easily result in errors and omissions.

    Which leads to the potential of:   claims that either errors or omissions in your work have damaged your client, and;  claims that the firm, at the time of the proposal, was undertaking a project for which it knew (or should have known) was not truly qualified by technical skills and experience (especially if you were relying on assembling a staff of as-yet unidentified individuals).

    I am not saying ambition is something to avoid.  My only caution is that when seeking to 'expand your envelope' care be taken to ensure you are not making a leap of proportions that will set you up for failure, or will expose you to risks that you have not adequately evaluated.

    ------------------------------
    Howard I. Littman, AIA, Emeritus
    Forensic Architect, Expert Witness
    Agoura Hills, CA
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