Category: business strategy

Shaun Carter’s recent piece on architects fees and money is something I think everyone should read. You can find the full article here at ArchitetcureAU.  Shaun is a past president of the NSW Institute of Architects Chapter.  I thought it would be worth commenting on some of the questions and issues that he raises. Everyone architect in the country should read this article.

The old joke 

He starts with an old blokey architects joke.

Did you hear the one about the architect who won the lottery? They kept on working until they were broke. This was my introduction to architecture. I thought it was a joke. Now I’m not so sure.

This was a fine joke thirty years ago. It has a little bit of the boom-bust mentality about it. Plus a tone of altruism. In other words, architects get money and then spend it on architecture. They get money and spend it on design hours. They do this because of a love and passion for architecture and society.  But as a joke it implies architects always go back to zero, or square one, when they go broke.

The usual catastrophe 

However, while the joke might contain some sublte truths, the problem is as that architects don’t just go broke to the point of zero dollars. They go negative, and the financial and emotional toll on themselves their families and their profession is enormous. No adequate superannuation, no assets no worth in their small businesses when they retire, its worse I guess for employee architects who are inadequately prepared for their later years. Working from contract to contract, below award wages, no paid overtime, moving from poorly managed firm to poorly managed firm isn’t really a recipe once you are past 50 or 60 for a comfortable grey life.

Exploiting the talent

Last week a graduate came to me and said he had been offered a casual job at 17 bucks on a kind of “training” basis. Anyone reading this can look up the award. Sometimes I wonder if one of the best things that could happen to the profession is that the Fair Work commission starts to prosecute architectural employers for not paying award rates. Under the award, a graduate architect on a casual rate should get $31.09 an hour and if full time or part-time. $24.87.

The Scourge of Fee Cutting 

However, as Shaun says the real problem is price competition and fee cutting:

I talk to architects all the time and in almost every conversation hear stories of outrageously low fees and cutthroat fee gazundering. Economics 101 taught me that when a good or a service is in high demand and the supply is limited, the cost goes up. So why is it, then, in this boom time for architects, that we have managed to slash our fees in a desperate race to the bottom? He then goes on to say: If we are to achieve major reforms and be respected as a profession, we need to be not only financially viable, but financially successful. Otherwise, how are we to achieve gender equality? How do we stop our practices becoming sweatshops of juniors working long and late hours?

Shaun Carter proposes four areas where he feels that architects need to change. These are architects, clients, regulation and cheap overseas labour (WTF?).

Idolising the creepy architects

Shaun argues that architects need to be better at business and that being poor at it is “just plain dumb.” I agree with this but to change this architects really need to shift their culture around. As architects, we have to stop idolising and revering “bad boy” designers. These guys are mostly creeps and yet they are the ones that get all the symbolic capital in our profession. Plus they know nothing about business or management. Or for that matter anything really. But hey does it matter when you get all the street cred.

Sludge 

However, he argues that architects need to collectively bargain minimum rates of fees and architects need a “strict ethical and moral code to prevent rogue architects from damaging our profession.” Fair enough, but try telling that to the AIA which as an organisation appears to have governance and decision making processes that are slow bureaucratic and easily hi-jacked by ego-driven personalities. Witness the recent hoohaa around the AACA vs. the AIA. Hence reaching any consensus that might translate into policy or advocacy approaches for architects is like wading through sludge.

Going for the Mandate 

Carter calls for minimum fee guidelines for the entire profession. He argues that governments should then follow these guides as well. However, I am not entirely sure how this might work in practice, and I am concerned in legal terms it might be seen as being anti-competitive. But hey if you are starting a practice, it would be great to get an idea of what you should be charging. I think one thing that all of our professional groups and associations could get behind is the idea (suggested to me by Vanessa Bird previous president of the Victorian Chapter). This is the idea that it should be mandated that every building project in Australia, over a certain amount, should have an architect. I am not sure how this kind of regulation would work in detail. But as Shaun Carter argues:

Regulation has been a dirty word these past 30 years of neoliberal and trickle-down economics. What we know of this period is that the failed economic model has advantaged the few at the expense of the many. Economic literature has thoroughly documented the failure of loose and limited regulation and the way this has run down professions and reputations.

Mutually Assured Destruction

Shaun’s third notion for saving the profession from the “existential cliff” and “Mutually Assured Destruction” as he calls it is to limit university places in architecture degrees linking this to the outsourcing of architectural work offshore. As he says:

“If the profession is going to send our future architects’ jobs offshore, then let’s stop the cruel practice of offering them meaningful employment with one hand and ripping it from them with the other.”

He then goes on to say:

Perhaps the most controversial reason for the erosion of fees is firms employing cheap overseas labour to undercut the market. I believe that this is the emperor’s new clothes of business school management. It drives down fee expectations that will be difficult to claw back, while limiting employment opportunities for our young architects because their jobs are being sent overseas, all at a time when we are enrolling and graduating architects at record rates.

Protectionism?

I am not sure about this line of argument because it starts to sound a little “protectionist” and raising the spectre of “cheap overseas labour” suggests stereotyped images of what that labour looks like. Think, call centres full of Revit CAD monkeys in large second-order centres full in South, South East or North Asia. Nonetheless, I certainly dont think that Shaun Carter is intending to cross the lines into Trump Tariff and Immigration territory. But really what is being suggested here does raise questions about some of the current dynamics in practice. This includes the globalisation of competition between architects and the commodification of architectural services with the rise of new technologies. Despite all the BIM hoopla are we really ahead of the technology game?

Too many at Architecture School? 

As for the numbers of architecture students in the Universities and how many graduates are produced in Australia I might leave that to a later blog. But needless to say in 2015, the universities made $225 million bucks out of architecture (Check that out here). I also doubt that very much of that goes back into research of direct benefit to the profession. On the plus side, the Architecture Schools do support the professions with lots of sessional teaching contracts. However, is that enough given how much money the Universities are making out of architecture? For Australian Universities, Architecture Schools are a valuable cash cow. However, Architecture Schools are by no means the largest of their international education cash cows. The universities also love architects, and they love architecture schools because it all adds to their branding, reputation status and symbolic capital.

However, I don’t see many of the 18 schools of Architecture joining these debates about the value of the profession and its worth. Most architecture schools and faculties are struggling to manage the strictures imposed on them by central university executives who think that having an architecture school, in the portfolio, is a bit valuable and kind of quaint. If that is the case, maybe those same executives can give architecture some more research money.

We are family

To overcome the malaise that architects find themselves in the architecture schools, the professional associations, and the AACA need to lobby for the worth of architecture collectively. A fragmented and ungovernable architectural community will not solve the problems architects face. As Shaun Carter argues fee cutting is a recipe for Mutually Assured Destruction.

I am almost on annual leave between semesters. In the next few weeks expect to see a few more relaxed beach blogs and tweets from Italy and the Biennale. If you want to know more about our RASP research project you can find it here.