What Have We Learned?
For those willing to take up the challenge, there has never been a more exciting time to be an architect.
The last few years have not been kind to the A/E/C industry in general or to architects in particular. Between 2008 and 2011, total construction spending in the U.S. dropped more than 20 percent, from $1 trillion to less than $800 billion, which eliminated more than two million jobs industry-wide. Revenues in architecture firms took an even bigger hit, declining 40 percent from $44 billion to $26 billion during the same period.
Compared to a national unemployment rate of about 9 percent, nearly 30 percent of all jobs in design firms disappeared. Staffs at all levels were affected, but emerging graduates were hit the hardest, with many deciding to pursue alternate careers. This came at a time when many baby boomers were entering their retirement years (some earlier than expected!). The combination of fewer graduates entering the profession with an increasing number leaving it means that there is very likely to be a talent squeeze in the coming years.
Coupled with these grim economic statistics are some other seismic shifts. The advent of BIM technology is fast becoming the industry standard, and has changed the way projects are designed and documented. The widespread acceptance of the LEED rating system has helped make sustainable design mainstream. Plus, innovative new delivery systems, such as IPD, are challenging the status quo. This has been a time of enormous change in how we are designing, documenting and delivering projects, whether it’s new construction or renovation. What have we learned, and where do we go from here?
Rather than complaining about tough times, let’s start with the realization that many of these changes are long overdue.
For far too long, the A/E/C industry has been accustomed to delivering suboptimal results. According to various studies, about a third of all projects do not meet schedule or budget, and more than a third of all construction materials wind up as waste. Even more astounding, 92 percent of owners do not believe that architects’ construction documents are suitable for the purpose intended.
For far too long it has been conventional wisdom that in terms of time, cost and quality it’s possible to deliver only two of the three at any given time. If an owner wants a job on time and within budget, then quality is at risk. If quality is the paramount concern, then either the job will cost more or take longer than expected.
In other words, the basic value proposition to its clients has hardly been reassuring.
This is a teachable moment. The A/E/C industry is changing in profound ways, and for the better, but only if it can embrace the lessons of the past few years and emerge from the recession stronger, nimbler and more efficient overall.
Let’s start with the realization that architecture is a team sport. It requires the talent and skills of a wide range of stakeholders, including owners, users, designers, engineers, consultants, contractors and subcontractors, manufacturers and suppliers, financiers and, yes, even the approvals agencies which have jurisdiction over the project.
Aligning all these interests requires strong leadership, and so there is a huge opportunity for those who are willing to step up and provide the vision, wisdom, and guidance that is needed. This is a role that can naturally be played by architects if they so choose. They are equipped by training and temperament to see many sides of an issue and to devise out-of-the-box solutions. They can think both creatively and technically at the same time. They are used to working in teams and dealing with overlapping responsibilities and divergent points of view.
That said, they are often hampered by a lack of expertise (or interest) in basic business and economic issues, which are not typically part of the design curriculum in academia. But the hard truth is that good business and good design are inextricably linked, and so designers must be conversant in both in order to get optimal results.
What are the key issues for the design professions today? First and foremost, the client base is shifting. More and more are turning to professional advisors such as program managers or real estate developers for advice.
This is especially true with institutional clients such as universities and hospitals, as well as large-scale corporations which manage substantial national and international facilities portfolios. This means that the role of the “client” is becoming increasingly professionalized, and this can sometimes create a barrier between the designer and the key decision-makers on the client side.
The second big issue is speed. In today’s challenging economy time is money, and a big part of the value proposition for any new project is speed to market. The trend toward ever faster schedules is not going away. To quote a presenter at the Design Futures Council summit held in London last August, “schedules will never again be as slow as they are today.”
Technology is a big part of the reason that design firms are being asked to deliver results faster than ever. BIM allows designers to explore new forms and structures, devising and testing a wider range of alternatives much more quickly, and to present multiple options in both 3-D and 4-D format so that they are more understandable by the client.
Computer programs can also quickly track cost estimates and analyze construction logistics. Coupled with a trend toward more off-site prefabrication of building components, this not only increases speed but also reduces errors in the field.
The natural consequence is that clients are demanding more for their money. They expect high quality design as a matter of course (who wouldn’t?) and they also expect the documentation to be both speedy and accurate (why not, with BIM technology?). Considerably less construction activity in the economy means that there are more available bidders for each job, with the result is that there is extreme price pressure. The increased level of competition also means that design fees are lower, so firms have to deliver more value for less.
The only effective response is for design professionals to consistently and effectively communicate the real value proposition of their services. They need to abandon the old saw of “time, money, quality … choose any two” and instead embrace and then be able to prove that “good design is good business”. They need to explain the why, how, what and when of the basic value proposition for their services in concrete, measurable terms, and then be able to follow through with actual results. This is in addition to, not in replacement of, aesthetics as a key consideration on any project.
The integration of smart business with smart design also invites changes in both the scale and organization of professional service firms. Expect to see the trend toward mergers and acquisitions continue. Also expect more integration among real estate developers, program managers, constructors, architects, engineers and perhaps even financial services firms.
As projects become increasingly complex, fully integrated professional services firms will become an increasingly attractive option for clients. This is a trend that’s been evident in other industries for years; there’s no reason that the A/E/C industry should not follow suit.
From 2008 to 2011, the profession took a tremendous hit, both financially and in terms of lost intellectual capital. The old way of doing business is not coming back, nor would we wish for it. Instead, the “creative disruption” of the recession has laid the foundation for a new, more tech-savvy, more effective and efficient industry — one in which design quality is valued more highly than ever before, but also one that must be organized for long-term, sustainable success based on sound business principles.
This is a time of great opportunity, but it will require moving away from conventional wisdom about contracts, business protocols, and standard methods of design, including and especially the “silo thinking” that has too often created barriers to true collaboration. Designers need to broaden the definition of their services to include not only nouns (objects called buildings) but also verbs (the processes used to deliver results).
Design can be narrowly focused on a single product, such as a vacuum cleaner, or it can be broadened to include issues of public health, safety, transportation, education and livable communities. For those willing to take up the challenge, there has never been a more exciting time to be an architect. We have the talent, tools and processes to make an enormous difference, if only we are willing to use them. This is a leadership opportunity. Perhaps Benjamin Franklin said it best: “All the great maxims have been written; it only remains to put them into practice.”
Scott Simpson is a senior fellow of the Design Futures Council and a member of its executive board. He is a Richard Upjohn Fellow of the American Institute of Architects. With James P. Cramer, he co-authored the books How Firms Succeed and The Next Architect.