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.
Thanks Su, another timely blog post. I agree I think it is the delivery cycle where we as architects and the profession misses to communicate accurately and reflect the true costs associated with the design and the subsequent production of the documents. Not to mention very few clients are willing to pay the true value of our services since there seems to be always someone else willing to charge much less. The thing is we are not producing widgets that are designed once and produced many times. Each project is typically unique no matter how similar it may be to another project. The time to design, research, coordinate and manage are critical areas that appear to be underestimated and controlled.
In architecture school nobody ever told me that I would be an entrepreneur if I was going to work on my own. For all the famously long years of architecture education how much time is spent making future architects aware of business and the client’s view of what we do? I was very fortunate to work for a developer for a year and see the ‘other side’, from the inside and I have to say that the vast majority of architects that we dealt with just seemed clueless. Typically it was here is my service and my (19th century) fee system – ie my fee first, your project second.
The fee bid to me is the heart and soul of your operation because if you screw that up you lose the job or you are stuck with it to the end doing something that doesn’t work financially.
This all flows back to realising your ideas because the best chance you have to achieve your creative ambitions is to work for yourself – and that means being a small businessperson / entrepreneur. Unfortunately this is nowhere in the culture of most architecture schools.
My other peeve is project management. I never used PM software in 14 years of studying and practising architecture – until I tried it when I set up on my own. Why is Microsoft Project (I actually use Merlin) such foreign territory to us? Merlin immediately revolutionised the way I work. I started with the RIBA plan of work and expanded it into a template – and I use it for timing and costing for each project. Once the template is set up it is very fast and gives you a ‘model’ to operate with and resource.
So one place to fix this is in education so that we think more like businesspeople (unless we prefer the image of the ‘struggling artist’). Percentage and hourly fees should be a last resort. We need to re-think how we work with clients and align our goals more with theirs. There are many other ways that we already use. We need to use them more.
Hi Su,
Great article, and seems right on the money. This could apply to any other high-value professions, too. Ultimately, “making money” is not the same as “doing something high-value”. “Making money” is an activity that involves the pieces you mentioned (or other pieces, depending on the business). Basically, it’s about creating a business model and feeding it the right stuff so that it can generate money.
“Being an architect” is a high-value activity from all sorts of points of view, but if you’re not doing the tasks that are actually generating the money, it stands to reason that you won’t see most of the money…
The same is true for all sorts of high-value professionals, including doctors, lawyers, and even software engineers.
Hi Su, what a fantastic article!!
You woud not believe that I have been scolded for implying that I believe that architecture should be treated like a business in my university.
I am a business woman at heart, and it does worry me, all the people telling me, not to follow my passion for money.
I didn’t agree with the ‘poor artist’ idea, that many are so comfortable with within this industry. I have sold many design things before, I have designed logos, websites and many more things, and I understand that architecture is very different, but like anything design-orientated, the client should be the center of focus.
I don’t believe that we should push our own ideas on our clients, an architecture company should be more focused on pleasing its clients than creating an image for itself.
In this economic crisis (UK) we don’t have space to do what WE want anymore, hopefully this will reshuffle our points of views, so that we understand that we should start making pur processes more efficient for architects. In the UK you don’t need an architect to design a building, we haven’t listened to clients for so long that they are frustrated with us, most people are willing to gamble with low sums of money, but a home, a dream, a future, they are not willing to be pushed about.
Hi Tumi,
Thanks for your input, I’m glad it has encouraged you.
Don’t be discouraged from pursuing your own creative directions though, I really believe it is possible to do both. The point is to look for clients who need your particular creative direction. If there are enough of them (or they are willing to pay enough for it) there is no reason your business can’t be profitable.
Hi Su – great article & wise words. As someone touched on earlier, as architects don’t produce ‘widgets’ certain clients only see the A1 sheets of paper in their hands as what they have spent their money on. Not the hours spent backwards & forwards with draft sketches, liaising with builders/planners/neighbours, additional details, client changes etc.
I always try to discuss my role at first instance with new clients to show that it’s not ‘just’ a drawing they are ‘buying’. In some cases they 100% understand & appreciate this. One example is a recent client whose neighbour was concerned over plans. The client was amazed when I offered to meet the neighbour & talk the scheme over with them. Within half an hour the neighbours where happy with the proposal & I had gained a new client!
The other end of the scale is a client whose first words to me were ‘ of course I can do everthing that you can’! We have agreed a reduced service where I take things up to planning & he carries out BRegs. I suspect he will soon discover the value of an architects service.