On Thursday the RIBA issued a press release, RIBA President Ruth Reed takes action to tackle student hardship and low pay, which set out proposals to deal with financial hardship amongst architecture students, graduates and young practitioners.

The proposals include:

1. an increase in the student hardship fund (to help ‘at least another 100 students’);
2. a review group to improve pay and employment conditions (and in particular ‘rigorous minimum pay requirements’) for implementation in 2011;
3. a ‘campaign’ to remove exemption from minimum wage for practical training over six months;
4. research into alternative careers for the 50% of graduates who don’t become architects.

Back in March the low pay issue hit the headlines with allegations that a London Architect Practice was offering a part-qualified architect a job at £400 for a 70 hour week, and I responded that these situations arise because either architects are either bad at business or they are willing to abuse employees (or both).

Looking at these new steps, which have been championed by RIBA President Ruth Reed, I’m encouraged by the review group because on the face of it the intention is to make a genuine effort to change the low pay culture of practice. The press release states that the review group will be comprised of representatives from small practice, ARCHAOS and APSAA, in other words small firms, students and professional studies advisors. Whilst it is a shame that there is no mention of large firms (who are surely not innocent of bad practice), at least this is encouraging.

On the other hand, the campaign to remove exemption from minimum wage for practical training over six months in effect means that a graduate or post graduate masters qualified architecture student can be employed for nothing at all for up to six months. Surely this isn’t acceptable? On the other hand, you might be shocked to learn that students in practical training are not entitled to the minimum wage, if their placement doesn’t exceed one year. (Thanks Malcolm Stroud)

Don’t moan, get stuck in!

The difficulty of course, will be in the effective implementation of these actions so that they produce real productive change where it is needed, i.e. graduates are paid a fair wage for a fair days work. This means any action must also tackle the long hours/unpaid overtime culture, or higher salaries will be meaningless.

It also means teaching people who have architectural practice how to run them on a profitable basis, and not to resort to exploitative employment practices as a substitute for business ethics, just because ‘its what we did when I was a Part II’.

If you’d like to get involved in this debate you should definitely join Keith Tomlinson’s Facebook Group ‘Architects against Low Pay’ which has over 2800 members. Ruth Reed has joined the group and is responding to forum discussions. Lets use our social tools to help her push ahead and make some real changes.

There is a common misconception amongst non-architect that architects are extremely well paid professionals, but this isn’t the case. In November 2007 the Office of National Statistics published a snapshot of UK Salaries which showed Architects (then earning on average just £38,559 Gross a year) were 30th in the list, behind amongst others, Fire, Ambulance, Prison officers and Police Inspectors, Chartered Surveyors and Town Planners, Construction Managers, Senior Local Government Officers and even Physicists, geologists and meteorologists.

Now £38k a year isn’t to be sniffed at, but it does surprise me none the less. So why don’t architects earn more money? My first theory is

Architects don’t get paid enough money because they don’t make enough money

The diagram above shows the four major ways in which architects make or spend money on commissions. They are also four ways in which architects can lose money.
Lets look at them individually.

Lead Generation

The first thing you must get right with Lead Generation is volume. You have to generate enough leads in the first place, and then you can evaluate them quickly and identify the ones which are good for your business.

Many people get leads from advertising, networking and promotional activities. Does your practice measure the effectiveness of these techniques, or do you simply renew your yellow pages box every year?

Do you have a procedure for quickly qualifying leads to confirm they are worth pursuing? As I mentioned in an earlier post, it is all too easy to say yes to any lead which comes through on the phone. This is the first way architects can lose money, by not generating enough leads and then choosing the wrong ones to pursue because they are the only ones that arrive.

The Sale

Recent discussion about whether the RIBA was right to omit the fee scales from its Guide for Clients suggests that fee quoting is the subject of much heart-wrenching misery in architectural practice. Why is this?

I have a feeling it is because of a rift between the value which architects put on their work and that which clients put on architects work. What is the correct value to put on your work? If you’re not confident about it, then you’re tempted to undervalue, underquote and end up with a job you can’t resource. If you don’t see eye to eye with the client, then you might overbid and lose the job to a competitor.

So do architects charge too much, or is what they deliver not valued? Here we come to number 3.

Delivery

A few weeks ago I heard the architect Rafael Vinoly guesting on Evan Davis’ BBC Radio 4 show the Bottom Line. The discussion was on managing clients’ expectations, but to kick things off Davis asked Vinoly “lets hear your views on the industry – what’s your favourite building at the moment?” Vinoly answered “The next one, always the next one.”

Now I don’t know about you but rather than filling me with optimistic enthusiasm for new opportunities, this statement fills me with the sense of dread. If my architect is thinking about ‘the next one’ what happened to my project?

Delivering a good project is not simply about managing client’s expectations though, its about understanding them and not delivering something else. You’ve agreed the fee – how do you implement it? Do you manage your staff time to meet the expectations? How often do you fail to do so?

If you’re lacking in confidence about the value of your work, then when the project gets ‘mission creep’ can you manage this too or do you absorb the excess work, and if so why?

And lastly, we have something which might be missed out altogether

Evaluation

Whilst you’re running a project, do you evaluate its performance against plan? Do you calculate projected profit and adjust accordingly? When the project ends to you carry out a full assessment of what went wrong and right, consulting all parties, including your staff?

I think that many practices do not effectively evaluate at the end of the project because they aren’t doing it during the project when something can be done for the project itself.
The benefits of an effective evaluation system are huge. Firstly you can avoid making the same mistakes again. You can learn from your client what is working for them and change things if necessary. You can agree how to promote the project, you can demonstrate why you should get repeat business, you can exceed expectations and receive referrals to similar clients.

Which brings me back to the start.

So which part of this cycle do you think is causing architects most difficulty? For me it is Delivery which is the greatest hazard to profits. When the process of project delivery is carefully attuned to the client’s requirements, all other success can follow. When it isn’t, all that follows is a loss.

Last week I asked the Question,

“When I say the word Architect, what comes to mind?”

and posted the question here on the blog, on linkedin and via my twitter account to as many people as possible, asking them to post up their responses via the seedkeywords website. All 166 results can be viewed in public here and you can play with the wordle image here.

Looking at the results in detail there are a number of themes.

The Results

The group of famous architects and characters playing architects includes Frank Lloyd Wright, le Corbusier, Tom Hanks (Sleepless in Seattle), Mike Brady of the Brady Bunch, David Childs, Frank Gehry, George Clarke (Build a new Life in the Country) Jim Belushi, Howard Roarke (The Fountainhead) and most popular of all, George Costanza from Seinfeld.

Clearly most people think of people who design buildings, and some have views about the use of the word ‘architect’ for other professions such as web architects, naval architects etc.

There are a group of positive comments such as ‘creative, passionate, brilliant’, ‘the mother of all artists’

There is a thread of negative comments about architects including the phrases
‘Monstrous Carbuncle’
‘Someone obsessed with space, probably because they have a lot of it between their ears’
‘Arrogant’
‘Late. Again’
‘Boring Pictures’
‘Slow, delays, inconsistency with engineer’s drawings’
‘design building they want, not what the client wants’
and appropriately,
‘unemployed’ and ‘redundancies’
There are several mentions of money and expense, and several of cleverness.
There is some tenderness too – such as ‘Creative, Impractical Luvvies’

And there are some comments that could go either way, such as
‘little boxes’ (a great song by Pete Seeger)
‘Are confused by humour’
‘Delete vinyl, insert carpet’

A further group have made the connection between artistic endeavour and practicality, either positively or negatively. There is a clear strand of thought in some that architects aren’t in the real world, yet others feel they bridge between the real world and imagination.

Some think architects are bald. Some think they wear bowties, black roll-neck sweaters and use Apple Macs. Another thinks ‘Male, 35 years old, white, casual, long rulers, large inclined tables’.

The most common buildings mentioned are office buildings, houses and monuments. Then there’s Venice, the Eiffel Tower and the Taj Mahal.

Is it what you expected?

Why does it matter?

The reason why I am interested in what other people think of architects is that its part of my brand, of my company’s brand. When you say to someone ‘I run a practice of architects’ you want to know what comes to mind, so that you can be prepared for what they don’t say as much as what they do.

Lets try an example. If a friend tells you about a new product, what do you do? You go and search on google for it, right? And on the first page of google is the public perception of that product. The views of friends and even other consumers on the internet are more valid to consumers today than the blurb on the company website. Thanks to Mitch Joel, author of ‘Six Pixels of Separation‘ for this example.

Some may prefer not to have these views aired, possibly because they fear that giving them a platform somehow reinforces them. The fact is that these views are held, good or bad.

Your brand has an image and it’s not what you say on your website.

What matters is that public perceptions of architects (and these are just a few taken in a straw poll) are significant to the way individuals perceive your business.

If like me you look at these perceptions and say ‘that’s got nothing to do with what we do’ then you and I have something in common – a job to do.

I’m not particularly keen on ‘Social Media Geeks’. A bit like I’m not particularly keen on ‘Architecture Geeks’. You know, the type of people who talk only to their friends and people in their own sphere, and who can’t stop spouting incomprehensible twaddle in language only their converts can understand.

However, things can get interesting if you can ignore the twaddle and look for the point they are making underneath, a message that could be transferred to your own environment.

Some of these people are very successful business people, after all. They must be getting something right.

This is what happened with Robert Scoble’s Posterous Blog today. I was on the train and scanning through Saturday’s daily update of what people had been writing, and I came across this post:

How Ford got my trust on a comparison to Toyota Prius; @chrisbrogan what do you think?

Oh Boring.

Firstly its about cars (I’m only interested in cars if I can drive them, not talk about them) and then it asks his friend Chris Brogan for his opinion.

Fortunately I managed to read further and found the article was about how Robert Scoble had run into a Ford man and told him how he’d just bought a Toyota Prius, and how the Ford man reacted.

“What did he do? He admitted he bought one too. Then he promptly praised it. Then he explained how his product was different. He also made sure to mention his company’s advantages (that they’ve been doing this longer). All three got me to trust him. Well, as much as I’d trust anyone pitching a product.”

After that Robert goes on to explain that the Ford man, Steve Kovak, cares enough about the safety features on cars that he’s willing to engage in an honest discussion about what is important for the future of vehicle engineering, irrespective of what company he works for.

I think this is really important for architects.

Firstly, when was the last time you picked up the phone to a client who told you they wanted a particular service and said ‘Yes we do’ even though you never have before and know that there is a practice much better at that particular service in your area that they should use instead?

Maybe you even said yes when you know how difficult it is for you to make money on those sort of jobs because you really work better at something else?

Secondly, how long do you think that kind of behaviour is going to go on, now that we have the interactivity of the internet?

The power of interactivity is in the conversation. The conversations are taking place, with or without you. They always have done, but now they can be seen.

Its time to be honest about what you are good at, what others are better at, and look after everyone who contacts you. If we don’t do this the profession will die out.

*apologies to Robert Scoble for calling him a SM Geek. He does it himself, most people probably agree, and he’s a nice guy.

Mime image: The Mime at work by Noël Zia Lee

by Richard Derwent Cooke

This is the third blog in this series, and hopefully you now have the core idea that being proactive is the key to success in these recessionary times. Last time we considered things that you needed to stop doing and now I’d like to consider those things that you need to start doing. Things such as:-

• You need to consider other businesses outside your own specialist area who might service the same clientele as you do, that you could form an alliance with or create new services that merge your two offerings;

• Think of sectors that you haven’t previously serviced that you have the skill set to work with
  Ask some of your best existing clients for referrals and suggestions as to who you should be talking to;

• You should look at your staff and see who has the potential to develop new skills and offerings, and encourage them to do so;

• Make at least a couple of hours a week to focus on strategic issues, shut your door, turn off the phone and ensure that you give it your full attention;

• Look outside your own area for inspiration, be that books, hobbies, courses, other countries, innovate by cross-fertilisation;

• Identify things to stop doing. A minimum of 20% of your time is wasted (probably a more!) and you should identify these activities and use that time to seed your Change programme.

• Get the idea out there that you encourage and embrace Change;

• Make time for networking, you’ll be surprised where this takes you. It isn’t about selling, it is about getting your ideas out there and listening to those of others and exploring areas for collaborating.

Like all lists, this one is far from complete, but it will get you started. You should brainstorm others with your own team. If you keep doing what you have always done, in a recession, all you can expect is less and less of the same thing! Good Luck…

“I like my job because it involves learning. I like being around smart people who are trying to figure out new things. I like the fact that if people really try they can figure out how to invent things that actually have an impact.”
Bill Gates

Previous blogs in the series:
Strategies for Success in this Recession – Part 1: Change how you see things

Strategies for Success in this Recession – Part 2: Things to stop doing
Richard Derwent Cooke is a Facilitator, Coach & Change Mentor and the founder of I-Change. Trained as a chartered accountant and in various alternative disciplines, Richard has been working in the fields of personal and business change for over 25 years, working with international blue chip companies and individuals. See www.i-change.biz for more details, or email info@I-change.biz. You can also follow Richard on twitter.

Note from Su:
Have you found Richard’s posts useful? Would you like to see other professionals guesting on Just Practising? I’d be interested to hear your comments.

By Richard Derwent Cooke

Once you have accepted that you are best able to succeed in the recession by taking charge, a key question to ask is “What am I doing that no longer serves me?”

Things like:-

• What activities are wasting my time? Remember the 80:20 rule

• Which customers are taking a disproportionate amount of time for increasing little reward?

• What systems that I use are no longer necessary, or capture detail we don’t use?

• What resources are we neglecting? This applies to people, space, time as well as your other assets

• What attachments do I have that keep ensnaring me?

• What sectors am I focusing on that are contracting rather than growing?

• What things am I doing exactly the same way as I have for the last 5 years that have not been reviewed to see if they are the best way to do things?

There are certainly many more good questions to ask yourself, but if you get together with your team and identify & challenge your sacred cows, you may be surprised by how much time and energy you can liberate to focus on things which will make a real difference. Remember, if you aren’t changing, it doesn’t mean that your customers, your competitors and the market place isn’t!

“Stop the mindless wishing that things would be different. Rather than wasting time and emotional and spiritual energy in explaining why we don’t have what we want, we can start to pursue other ways to get it.” Greg Anderson

Previous blogs in the series:

Strategies for Success in this Recession – Part 1: Change how you see things

Richard Derwent Cooke is a Facilitator, Coach & Change Mentor and the founder of I-Change. Trained as a chartered accountant and in various alternative disciplines, Richard has been working in the fields of personal and business change for over 25 years, working with international blue chip companies and individuals. See www.i-change.biz for more details, or email info@I-change.biz. You can also follow Richard on twitter.

by Richard Derwent Cooke

The world is in global economic melt down .. right? And yet I am sure there are many people and businesses that are doing very well in today’s marketplace. Of course there are practical difficulties with getting credit (if you need it) or perhaps with clients who lack liquidity. However, if we give away our power to these external factors, we inevitably cast ourselves as victims of circumstances.

It is far better to recognise these changes as the opportunity that they undoubtedly are and begin to think how we can change to take advantage of this state of flux. In a steady state market, the big boys always win as they have the resources and the reputation. When things become turbulent, there are opportunities for smaller, more nimble, more inventive businesses to steal a march on them.

Martial artists train so that when they need to use their skills they don’t become paralysed by fear. It is easy to feel scared by all that is going on, but recognising the upside of this situation helps us to move forwards, and approaching things with a positive mindset helps us be creative.

Being the same as everyone else and conforming is no longer the safe option. Differentiate yourself: find or build a niche. What element of the market particularly interests you or are you particularly good at? What hasn’t been tried before or what classic ideas and techniques could be adapted today’s circumstances? What techniques can be ported over from another area or discipline, such as what could a boat builder teach a house builder? What ideas could be transferred from one part of the world to another one? What is traditional in one place is innovative in another.

So Step One is to change how you look at things….

Steps Two & Three will follow shortly.

“Perception is strong and sight weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things.”

Richard Derwent Cooke is a Facilitator, Coach & Change Mentor and the founder of I-Change. Trained as a chartered accountant and in various alternative disciplines, Richard has been working in the fields of personal and business change for over 25 years, working with international blue chip companies and individuals. See www.i-change.biz for more details, or email info@I-change.biz. You can also follow Richard on twitter.

“A third of architectural practices made so little profit in the boom times that they could go bust with the onslaught of the credit crunch, an RIBA survey has revealed.

This year’s RIBA Business Benchmarking Survey, released to BD this week, shows that just 67% of firms met the industry safe standard of profits equalling 15% of total turnover.”

Survey Warns of Low Profit Margins:
Building Design 7 November 2008 (Will Henley)

Read more of this article here

Blimey.

I’ve been managing architects practices for over a decade now, and I’ve met many architects and young graduates looking to have their own businesses too. The one thing which seems to be of most concern is the business of having a business.

It’s all very well having an architectural mission (and don’t get me started!) but in the cold light of day, those of us not blessed with deep pockets or wealthy benefactors have to make a buck. Enough bucks to do what we want.

Now it’s not rocket science, but it can be as scary, so I thought it would be useful to invite some rather special people to make a contribution to the thread which runs through this blog, the one about money and running a business. [Keep up at the back there!]

Over the coming months a group of people who help architects (and a range of other people who have businesses) will be sharing their ideas and encouragements with you here, no obligation, just to prove that it is possible, and people are making money, and keeping their principles, right now. Maybe you might learn something. I know I will.

Let the discourse begin…

Running a business is a matter of ins and outs.

‘My other piece of advice, Copperfield,’ said Mr. Micawber, ‘you know. Annual income twenty pounds, annual expenditure nineteen, nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and – and in short you are for ever floored. As I am!’

Go back to Bed

A good friend and fellow designer told a story whilst she was giving a lecture recently to a bunch of women hoping to make a business out of design.

She had a project where she worked out that it would have been cheaper for her to stay in bed all day for six months and write a cheque to the client for £5000, than it was to do the job the way she did it.

This led to the term “Get out of Bed Rate”.

Stage 1, the Cost of the Organisation

Look at the job you have to do and work out all the costs associated with it. These will include a proportion of your overheads, and the actual costs of all the people involved.

The best way to be honest about all your costs is to look at the last years expenditure for each type. Leave out any staff salaries for now, we’ll do them later. Look at rent, heating and lighting, equipment servicing, phones, faxes and stationary, insurances etc. Take the list off your profit and loss for last year. Don’t have a profit and loss? You’ll be telling me you don’t have a cash flow forecast next!

If you think any of the costs will change over the course of the project, adjust them to produce a forecast for the coming year. These are your annual overheads. Divide it by the number of working hours in a year (1700 is a reasonable number, if you work 37.5 hours a week as everyone should) and that gives you the money it costs to run your business per working hour. If there are several of you, of course you can all share the cost between you, but more of that next.

Stage 2, the Cost of the People

So what about staff costs? If you pay anyone to do work for your business, take their salary and all the costs of employing them (your contribution to their National Insurance, any bonuses, agent’s fees, etc) and divide that by the 1700 hours.

Divvy up your overhead hourly rate amongst your staff and you can work out the cost of any job according to who will do it, using their salary + overhead hourly rate. Call it a COST RATE – there is NO PROFIT in it.

I bet it’s more than you thought it was. No cheating! Remember, for any less… you might as well stay in bed.

Stage 3, the Cost of the Job

Now you can work out how long it should take you and your people to do the job and multiply this by your cost rates. This is the amount of money you estimate it will cost you to do the job.

You then need to add for contingencies (think of the worst that could happen, factor in lean periods) and profit and agree your fee. You know how much it will actually cost to do the job, this is your Get Out Of Bed Rate. Any fee smaller than this, you might as well all stay in bed. Agree your fee from a position of informed confidence. How much value do you add with your work? What do you get out of it?

But it doesn’t end there.

Stage 4, the Real Cost of the Job

Whilst you are doing the job, keep an eye on the clock. Are you far enough along the process right now? Is it taking you longer than you expected? Revise your forecast to tell you how long (and how much) it will now cost you to do the job. Are you getting close to your GOOBR? Now you are in the correct position to make an informed decision. Ask for extra money, or pull the plug.

Or you could just go to bed and send the client a cheque of course.

And what of my friend? I will spare her blushes. Needless to say she’s pretty well off these days!