Tuesday, September 16, 2014

SMALL FIRMS ON CHOPPING BLOCK?

Lance Bird, FAIA, Principal, LCDG
 

AIA defends our interests, provides learning opportunities and essential documents, and is a forum to meet and share ideas with our colleagues. Great for small firms.  However, forces and trends bringing rapid changes to our profession may crush those firms. 

It Was the Best of Times, It Was the Worst of Times    Changes everywhere we look.  For example:

Plus – According to DBIA, Design-Build (D-B) practices reduce construction change orders and claims.  Large clients like LACCD, LA County and Caltech favor D-B. 

Negative – As part of the bidding process, the architect prepares schematics – for free!   How can a small firm afford it?  And why would a large contractor partner with a small firm when the Gensler’s of the world have better connections and resources to compete in the proposal process? 

Best of Times

  • Getting busy! 
  • Extraordinary design tools
  • Easy and quick access to information
  • Easier to practice nationally and internationally – IBC, improved communications
  • Ever-larger architectural firms responding to economies of scale. They have the wealth to influence legislation and develop new technologies.  
  • Legislated sustainability
  • Growing number of specialty firms – knowledge equals better client service
  • On-Call Contracts – Public entities are awarding large, multi-year contracts Marketing costs are reduced and a client partnership is formed 
  • CMs and Design-Build practices reduce construction change orders and claims
  • Lease-leaseback contracting allows school districts to select builders on the basis of qualifications instead of low bid. 
Worst of Times (for small firms)

  • As economy improves, firms will have difficulty finding experienced staff with less than five years’ experience.  They’re gone!
  • Declining Architect registration – Baby Boomers retiring and recent graduates bailing because of limited jobs and daunting licensing requirements
  • As we get busy, we have less time to check our work, leading to more construction claims 
  • On-call contracts blocking new firms from getting work during the term of the agreement 
  • Diminishing role in construction as D-B and CM entities grow 
  • Increased liability – Witness the California Supreme Court ruling against SOM
  • A squeeze on fees and the expectation of Architect’s to bid for projects – Public sector ignoring Qualifications Based Selection and architects going along with it (bidding).
  • Increased regulations – ADA, California Energy Code 2013.
  • Growing communication and documentation expectations
  • As small firms get squeezed out, “hands-on” personal service may also diminish. 
  • Growing number of specialty firms – challenges generalists that can’t compete. They haven’t done 20+ fire stations, etc.  A loss to “fresh thinking” and new ideas.
What can AIA do for small firms?  Promote the advantages a small firm brings a client:  hands-on personal service tailored to a client’s personal needs. 

What can you do?  Consider teaming to augment your strengths, increasing your competitiveness.  Be the ‘go to’ architect in a narrow specialty.  Good luck!