The Business of Architecture

The essence of managing a successful architectural project is delivering what the client expects, on schedule and within budget.

Essentially profitable firms all need to manage people, projects and profit well to succeed –this is my ‘take’ of the 3 big issues within the 3 big areas:

  • People
    • Alignment + Engagement + Motivation
    • Talent Management
    • Forecasting / Lead time
  • Projects
    • Planning and Budgeting
    • Success factors
    • Earned Value Analysis
  • Profit
    • Strategic Pricing (value pricing is part)
    • Performance Metrics (KPI’s)
    • Cashflow v’s profit timing

As you know, Architects look out at the world through a creative lens, but often the people they do business with (builders, developers) , are far more commercially savvy and better at managing projects. The academic design ideology instilled in them, equips them to create great outcomes for society, but doesn’t equip them with many business management tools.

I have a saying “ every decision you take, every action you take has a financial consequence’  As a CFO, with Industry experience, cashflow  management is my domain, but every mistake along the way impacts on it . Clients who will pay bills. Jobs that aren’t managed properly etc. After experiencing the wrong way, I taught myself the right way – the hard way.

I talk to a lot of Architects and there is a common theme for the ones that struggle;

  • Pricing v cost – they use the fee as a target and “ make it happen’ hope strategy
  • Then they delegate full responsibility to someone
    • Without the skills to PM
    • With no input to the budget
    • Whose idea of success if different to the owner
  • They have low utilization
    • Good at Project / Admin
    • Marketing becomes this ‘bucket’ to chuck cost
      • If I charge the job it will kill it
    • Scope creep

A lot think they are going to sell their way out of ‘trouble’ by winning that next big job.

They think that their team will be better at managing the job next time. They think that things will get better on their own …even though they continue to do the same as they always have done.

They won’t. They can’t. You won’t either.

Even though Architects are highly skilled professionals, they operate within a highly competitive business environment and Revenue is subject to the same principals of supply and demand as any industry. All that will happen is that if you put your fees up to cover the previous losses, you will simply price yourself out of it.

Until you have the visibility of the problem and understand the underlying issues, you will just be guessing. Is the problem the client, or is it actually your firm?

Who do you think is going to pay for inefficiency? The client or the firm?

There are basic performance metrics that shine a spotlight on the problem areas of your business and allow you to home in without wasting time jumping at shadows.

We run CPD approved training courses to help Architects get better rewarded.

This course will arm you and your team with new skills to improve project delivery, client satisfaction and importantly – financial performance. You’ll see an immediate shift in the way your team manages project costs. For more information follow the link. https://mailchi.mp/ab850825750a/hhujbjwbwi

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