Learning from lawyers

denny crane

I recently had the intriguing experience of requiring the services of a lawyer. I say intriguing not because of the legal matter (which was a bit of basic conveyancing) but because my firsthand experience confirmed the commonly held view that lawyers speak a different language from the rest of us.

My lawyer not only crafted the documents I needed in advanced legalese, she structured them in an impressively unsystematic way. Cross references abounded: this general condition would refer to that specific condition would refer to this schedule would refer to that accompanying document. I felt like Alice, trapped in a rabbit hole with no escape.[1]

Is there a lesson in this?

A lawyer’s job is to navigate the tricky waters of the law on behalf of her client. She uses her knowledge and experience to represent his best interests at all times. But a lawyer is also a service provider, and as such must manage her relationship with her client, providing clear communication and defining the scope of her involvement. These technical and management obligations coexist as they do for any professional.

While I suppose my legal interests were well protected, I was not well serviced. Thanks to her use of jargon and an impenetrable document structure, my lawyer did not empower me to contribute to the legal process. I never even felt like I had a handle on my own documents. I wondered how, despite these shortcomings, the legal profession (or at least my limited experience of it) can occupy such an unshakeable position of authority?

Hot on the heels of this question was a stint of self-reflection. In contrast to my legal experience, I like to think the architecture profession by and large addresses the minimum requirements of client service as a matter of course. And one of our core skills is the ability to resolve complex briefing requirements into simple solutions. Yet our authority is under constant siege.

armour

Is there a correlation here?

I suspect the answer is yes, and it starts with the issue of complexity and simplicity. I think my lawyer was not unable but unwilling to distill my complex brief into a simple document.

In the hands of my lawyer, words, sentences and paragraphs all grew longer and more convoluted. She wielded opacity like a tactical nuke, and not by accident. You see, my humble legal document was in fact performing two jobs: first was the job I was paying for, which was to protect my interests. Second was its hidden job, unspoken but powerfully implied, which was to protect the entire legal profession.

For lawyers, legal jargon is in fact a highly effective armour. As it’s a language that only they speak, they have rendered themselves guardians of the legal process. And since it’s a language they collectively, systematically and continuously use, they have created a positive, self-generating cycle. Each time one lawyer writes a sentence as long as a paragraph, another lawyer must step in to interpret it. Every single action perpetuates more need for legal services, not less.

And the true stroke of genius? The legal profession insists all this is in the interests of its clients. It has created such strong demand for its services, the buying public is willing, even begging to pay it for them.

But wait, there’s more. You might not believe it, but this is not the only way lawyers protect themselves. Here’s a brief list of some of the other ways they do it:

  • A barrister cannot be sued for more than two million dollars.
  • Documents used in litigation cannot breach copyright.
  • Barristers cannot be sued for defamation for anything they say in court.
  • And best of all, a barrister is immune from litigation in court. That is to say, a lawyer’s client can not sue her for negligence while she is representing him in the courtroom, even if she were to start swearing at the judge in Klingon and arguing for the other side.

untangling

Architects, by nature, are not so cunning.

On every one of our projects, we balance and clarify complex design briefs. I often tell our clients that this is one of the most important services we offer, and think proudly of it as akin to the untangling of a giant knot of ropes. Randy Deutsch even suggests that  the “problem-solving power of integrative thinking” is one of the architecture profession’s most formidable skills.[2]

But by making clarity in the built environment our business, we open ourselves up to competition. I’m not suggesting we change who we are, but we do need to do more to help ourselves.

Have you ever heard of a cheaper version of a lawyer? There are conveyancers and legal assistants, but there is no confusing them with the real McCoy. In architecture meanwhile, we have any number of competitors: draftspeople, project managers, design and build companies, building designers, even volume builders. We may not think they’re playing in our league, but the buying public can’t tell the difference. To our own detriment, we have never attempted to mark and then defend our territory.

What can we learn from the lawyers?

The legal profession is in a unique position to affect the legal landscape in which it practices. Many of the aforementioned protections were initiated via case law, that is a judge has decided in favour of a lawyer during a trial. Since around 90 – 95% of judges are promoted from the bar, this means the profession benefits from protection bestowed by itself.

We may not have such an enviable reach, but that doesn’t mean we don’t have other options available to us. We are, after all, the preeminent experts on the built environment. What do we know or do that we can use to help ourselves?

  • Legislating minimum design standards to match New South Wales’ SEPP 65 would be a great place to start. Holding onto the requirement that multi-residential projects be designed by an architect is essential.
  • Advertising propaganda is not the ethical dilemma it once was. Though atrociously misguided, the recent Ask an Architect billboard campaign was pithy and well-executed. This should be expanded and redirected to support the architecture profession as a whole.
  • As I’ve discussed previously, we need to thrust ourselves into the centre of any public discussion of the built environment. We should be the experts called upon by Jon Faine, Tony Jones and every other journalist in Australia broadcasting a piece on any subject from housing affordability to environmental sustainability, real estate or urban planning.
  • The Office of the Victorian Government Architect needs to be reinforced and immunised from the vagaries of the political cycle. It also needs to be funded and given great big pointy teeth, so that its design review panel can make a meaningful and widespread difference. A levy on new developments would be an easy and transparent way to achieve this.
  • We need to become less queasy about popular media. The Block and The House that 100k Built may be antithetical to good architecture, but we’re better off embracing than ignoring them. I’d wager good money that they’re watched by a large chunk of the 95% of new house builders who don’t use an architect.
  • We need to consider producing our own popular media. I don’t mean edgy documentaries, I mean good reality television or popular dramas that air in prime time on Channel 7. MasterChef doesn’t diminish the cult of chef celebrities, it enhances them; Boston Legal and Suits idolise the legal profession; why not architects?

I have heard it said that architects are the guardians of the built environment. I like this sentiment very much, but we need to consolidate this philosophy. Our dwindling influence on the building industry is evidence that good design, even great design, is not enough. We must urgently use every weapon at our disposal – political, regulatory, marketing – to ensure our place at the table is secure.


Footnotes:

  1. Some years ago, friends of mine sold their company to a US-based multinational. American legal jargon in fact puts its Australian equivalent to shame. What should have been a 40 page contract of sale grew until it filled an entire lever arch folder (plus appendices). One particularly important clause comprised a single sentence that ran unpunctuated for an entire A4 page.
  2. Randy Deutsch; How We Can Make Collaboration Work: How Architects Can Decentralise Rather than Be Marginalised; in Design Intelligence; January / February 2014. An excerpt can be viewed here.

Image sources:

  1. Denny Crane. Photo sourced from The Incredible Tide.
  2. Maximilian Armour. Photo sourced from Wikipedia Commons.
  3. Untangling by Jeff Wall, 1994. Photo sourced from the National Gallery of Victoria.
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The mystery of marketing

Marketing is a constant source of intrigue for the architecture profession. We don’t understand it very well, so regard it with reverential awe. Marketing, we think, is the magic lamp that will make us rich. So we talk about it all the time, we ask our colleagues in hushed whispers for the secrets of their success, we even pay good money to gain insight into its hidden truths.

I’m under no illusions about my mastery of this dark art. But after all the lectures, seminars, forums and blogs I’ve attended or read, I at least understand why there’s so much fuss:

The outcome of good marketing
=
More clients

In other words, we get more clients because more of the right people come knocking on our studio doors. And by right people, I mean people who want what we do and have the money to spend on our services. The marketing industry has a term for these wonderful people. It calls them qualified prospects.

The job of marketing then is to elevate prospects from the more generic group of suspects, that is, anyone thinking of engaging an architect.

According to Winston Marsh, whose annual seminar sessions on marketing I’ve attended, the conversion of suspects to prospects is best achieved by letting the buying public know what we do. This is more than having a website and a business card, it’s about targeting the right suspects.

So how do we know if we’re targeting the right suspects?

Well, to quote Michael Bloomberg, “In God we trust, everyone else bring data.” So earlier this year, I started tracking our project leads. I picked through our old emails and pulled out key information for every prospect who has ever called, emailed or walked through our door. It was a revealing exercise, telling me for instance that after 5 years of practice this has happened 79 times.[1] And it was surprisingly easy to do. All I logged was four simple pieces of data:

  1. When each prospect made contact
  2. How she found out about us
  3. Whether we submitted a fee proposal
  4. Whether we won the commission

Since the aim of this exercise was to be systematic in understanding how prospects discover us, I established a list of ten categories that would group them according to the various marketing exercises we undertake (or others undertake on our behalf):

  • She reads this blog
  • She is a family or friend
  • She used the AIA’s Find an Architect service
  • She discovered us via online media
  • She is a past client
  • She visited a past project
  • She discovered us via printed media
  • She discovered us via television media
  • She came across our website
  • She discovered us via word of mouth

I filled in a simple spreadsheet (remember, with just four bits of information recorded against each lead) and amazingly rich information began to pour out of it. I now know which marketing exercises generate the most number of enquiries; which sources are the best at converting into commissions; and how these numbers change from year to year.

What follows is a summary of my findings, and a bit of a guide to help other young architects gain the same insights about your practices as I have ours:

Suspect to prospect

As I’ve noted previously, a colleague of ours relates the story of Peter Maddison, director of Maddison Architects, who disappears whenever the practice grows a bit quiet. He schedules lunch after lunch after lunch, catching up with old friends and acquaintances. He asks what they’re doing and what’s happening in their lives. In so doing, he implicitly reminds them that he’s open for business. Weeks or months later, when that restaurant site is purchased or new office space leased, his lunches pay off.

Our strategy is less boozy and, I have to confess, less targeted. We go for the scattergun approach: more is more. We put ourselves and our work in as many places as possible: on our website, this blog, Twitter, Instagram, FacebookPinterestHouzz and Find an Architect. We employ marketing campaigns for individual projects in printed and online media. We remind our friends and family that we’re architects, and encourage past clients to evangelise on our behalf. We even initiated an unsolicited urban renewal project for our street, and met with all our neighbours to promote it.

But the data speaks volumes. I now know that online media generates the greatest percentage of prospects (25%), but we are extremely unsuccessful in converting them into clients (5%). In contrast, our family and friends represent the second greatest percentage of prospects (19%), and we are very successful in converting them into clients (73%). Printed media and our website, perhaps the two most traditional avenues for marketing, together represent only 2% of our prospects and 0% of our clients.

lead origins

For our young practice, it can feel it times like we’re just waiting for the phone to ring. This data puts our impatience into perspective, and makes me feel pretty good about things. Considering all ten categories, spread out over the last five years:

A prospect makes contact once every three and a half weeks.

Prospect to client

From a business-planning point of view, understanding the next step – what proportion of prospects convert to clients – is the most important insight to gain. This helps in an egocentric way to measure how successful we are at wooing our clients, but more pragmatically reveals how many projects we’re likely to win each year and, consequently, how much money we’re likely to make.

I can’t stress enough how important this is. Despite architects’ collective reputation as money-shy, the regularity of new projects coming through the door should underpin your entire financial management strategy. The key question really is: how much money do you want to earn? There’s some simple reverse-engineered math you can do here:

Salary you’d like to earn in a year = $100,000
Average fee for a project = $50,000
Average duration of a project = 2 years
Fee earned in a year from an average project = $25,000
Number of projects needed to earn salary = 4

My little spreadsheet gives us the hard numbers: we are asked to prepare fee proposals for 56% of the leads we receive, and 59% of our fee proposals convert into projects. Multiply these numbers together, and I find that 33% of our enquiries lead to commissions, or in other words:

For every new project we need the phone to ring three times.

lead conversion

If we multiply the regularity of our enquiries (once every three and a half weeks) together with our success rate in converting enquiries into projects (once every three enquiries), we discover another great bit of data:

We win a new project every ten and a half weeks.
Or
We win five new projects every year.

Growth

This is where the data starts to get really useful in terms of working out what to do next, how better to market ourselves. Back in 2010, pretty much no-one had ever heard of Mihaly Slocombe. Five years on, we’ve been published in various places and have won the odd award, so maybe we’re a little bit famous. A further five years from now, who knows where we’ll be or what we’ll be doing?

All of this means that the above information is dynamic. Some sources have grown since we started our practice, others have shrunk. Some have become better at converting enquiries into projects, others have become worse. My spreadsheet once again comes to the rescue, allowing us to track the overall growth year by year for all enquiries, for each prospect category, or for commissions relative to enquiries.

Project leads via online media is a telling example. From 2010 to 2012, we received zero leads from this source; in 2013, we received five; in 2014, fourteen; and so far this year, one. This growth has meant online media has become one of our most prominent lead generators. But conversions continue to be very poor: in 2013, the five leads converted to zero commissions; in 2014, fourteen to one; and so far this year, one to zero.

Happily, this is an isolated phenomenon for us. I think the poor conversion rate is due to the absence of trust inherent in a lead generated by online media, but this is perhaps a subject for another post.

overall growth

Overall, the picture is pretty good, very good in fact. While our successful conversion rate has always been more or less static (one in three), both our enquiries and our commissions are on an upwards trend:

More enquiries
= more commissions
= more projects each year
= more money

This means all sorts of things: maybe we need to think about taking on more staff; relocating our studio to a larger space; increasing our fees; upgrading our accounting system; engaging an office manager… All very good questions that only come about once we analyse our marketing position.

Yet despite the importance of this self-awareness, I imagine very few practices bother to gather this data.

If you’re anything like me, you won’t be satisfied with intuition or reactionary tactics to ensure your practice thrives. You’ll need to base your decisions on a rational understanding of the game state of your practice. This means collecting data and analysing it. It means ensuring you have everything from accurate timesheets, to productivity forecasts, and project by project financial analysis. Importantly, it means demystifying marketing, if not the elusive secrets to marketing success, then at the very least the dynamic impact it has on your practice.

Good luck.


Footnotes:

  1. While we officially founded our practice in 2010, we received commissions for four side projects prior (while still working elsewhere). These projects have been figured into our calculations.

Image sources:

  1. Lead origins, this and subsequent images courtesy of author.
  2. Lead conversion.
  3. Overall growth.
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A rogue trade

Most of the time, the construction of an architect-designed project proceeds according to plan. Construction unfolds on time. The construction documentation is clear and free of ambiguity. The trades perform their work skilfully and conscientiously. There are few surprises, be they physical or financial. The builder, owner and architect maintain a positive working relationship.

Sometimes though, construction does not proceed according to plan. Through negligence, disagreement or accident, a project is derailed. The derailment might last a moment in time, soon forgotten, or it might endure the entire project, poisoning both the process and relationships.

We have experienced and survived a number of derailments. They are stressful, sometimes expensive and always fractious. They test the good intentions of everyone involved.

What follows is the 6th of eight disaster lessons from site. We ask what went wrong and review what we’ve changed in our practices to prevent it from happening again. An archive of the series can be accessed here.

6. A rogue trade

20141228 rogue trade

What happened

Construction of a house can easily involve as many as twenty separate trades: excavators, demolition experts, concreters, steel fabricators, carpenters, roof plumbers, window fabricators, glaziers, brick layers, renderers, electricians, plumbers, hydronic heating installers, air-conditioning installers, joiners, plasterers, tilers, painters, landscapers, cleaners.[1]

When working with a good quality builder, two positive things happen: first, he is more likely to work with quality trades; and second, his approach to the construction process rubs off on them. His workmanship, attention to detail and cleanliness infuse everyone else on the team.

Invariably however, there is a rogue trade.

This has happened to us twice, in both cases with joiners. On both projects, the joiners began their work diligently. On both, the first joinery units delivered to site were built well. And on both, at some point their quality began to suffer.

What happened next

On one project, the mitres between timber benchtops were misaligned, on the other, timber veneer panels were discoloured. These issues were serious enough to warrant rectification work, however once the problems were identified they snowballed. Instead of knuckling under and just fixing the problems, the joiners grew recalcitrant and obstructive. Further workmanship suffered and units had to be repeatedly remade. Timeliness also began to spin out of control: deadlines were missed, promises weren’t kept, relationships began to suffer.

Why we think it happened

Everyone makes mistakes. Though we all begin with intentions of flawlessness, mistakes invariably happen. The existence of the mistake is not a problem – c’est la vie – as long as someone takes responsibility and fixes it.

In the case of our two rogue joiners, they refused this responsibility. Indeed, they blamed everyone under the sun but themselves, rendering the very idea of fixing the problems difficult for them. Instead of immediately sending in their most skilled craftsmen to make things right, they dragged their feet and eventually, grudgingly, sent in their most junior staff who inevitably caused yet further problems.

The lesson we learnt

Of all the trades, joiners are amongst the most important. Their work is very visible in the finished project, and designed to be manipulated on a daily basis. The detailed and complex nature of their work also makes them most vulnerable to error.[2] It doesn’t help that the joinery trade is often the most expensive, nor that their work is conducted off-site, away from the regular scrutiny of architect, builder and client.

The lesson we learnt, though have yet to deploy, was to consider one of two alternative ways of ensuring the right joiner is used for a project. Both, unfortunately, attract their own unique risks:

  1. We could nominate a joiner who knows our work, and we know will do the job right. This will mean the joiner’s price is not provided in a competitive environment, meaning his price might be unnecessarily high. It will also mean that the builder may never have worked with the joiner before, increasing the possibility for a poor working relationship.
  2. We could nominate a provisional sum for the joinery trade, and require the builder to obtain competitive quotes for the work once construction has started. This means the builder isn’t relying on a cheap joinery price to win the job, but exposes the client to the risks of an unsubstantiated provisional sum.

These strategies are relevant for any trade, though are most relevant for the more detailed or visible parts of a project.


Footnote

  1. Not to mention the dozens of other specialist installers that often work on more expensive residential projects.
  2. A timber frame that’s not quite plumb can always be adjusted prior to sheeting. A benchtop has no such opportunity: it needs to be perfect first time around.

Image source

  1. A rogue trade, author’s own image.
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A pause in construction

Most of the time, the construction of an architect-designed project proceeds according to plan. Construction unfolds on time. The construction documentation is clear and free of ambiguity. The trades perform their work skilfully and conscientiously. There are few surprises, be they physical or financial. The builder, owner and architect maintain a positive working relationship.

Sometimes though, construction does not proceed according to plan. Through negligence, disagreement or accident, a project is derailed. The derailment might last a moment in time, soon forgotten, or it might endure the entire project, poisoning both the process and relationships.

We have experienced and survived a number of derailments. They are stressful, sometimes expensive and always fractious. They test the good intentions of everyone involved.

What follows is the 5th of eight disaster lessons from site. We ask what went wrong and review what we’ve changed in our practices to prevent it from happening again. An archive of the series can be accessed here.

5. A pause in construction

pause in construction

What happened

The opening trades of construction proceeded rapidly, on or even a touch ahead of schedule. Excavation, the concrete floor slab, framing and roof cladding were all finished within two months. But towards the end of this period, we made a late change to the window system. This would mean an unavoidable pause in progress while the window frames were fabricated: the builder was scheduled to finish the last of his pre-windows work a full month prior to their delivery.

What happened next

The builder found other work to fill the gap, getting started on a second project. He was transparent with us, though really what else could we expect? It was perfectly reasonable that a four week lull would need to be filled so he could keep his staff busy.

What we hadn’t expected though was that the new project would take over the builder’s attention as his primary focus. While the quality of his work on ours never suffered, from that point onwards progress became sporadic at best. During the finishing trades, the project barely limped along. Ultimately, it took the builder six weeks to get through the first third of construction and eight months for the remaining two thirds.[1]

Why we think it happened

The four week pause was enough to permanently disrupt the broader organisational focus of the builder. Managing the flow of work on site is an intense and continuous exercise that demands a builder’s full attention, attention he no longer had to give. He was now required to balance the competing demands of two sites, located at opposite ends of Melbourne, both in terms of anticipatory scheduling and on-site staffing. It was a task that proved too much for him: excuses began to creep in and milestones were repeatedly postponed.

Perhaps central to this was the cause for the disruption, that is, a change we and the client introduced. The windows delay was not something the builder had anticipated, and he was forced to cope with it on the fly. Though it was not discussed from that point onwards, it’s possible the delay became something like an excuse for him. He could let another week slip because, after all, it wasn’t his fault he had to get started on a second job.

The lesson we learnt

A builder is a small business operator. He has staff and overheads, both of which need to be paid every month. As mentioned previously, he also has to manage large volumes of cashflow to earn his income. He needs to stay busy or he’ll sink.

A significant delay, no matter what causes it, will mean a builder has to take himself and his staff elsewhere to fill the gap. The lesson we learnt was to ensure all our critical decisions are made with enough time for the builder to proceed with his works on schedule. We may not be able to control every external delaying influence on a project, but the least we can do is remove ourselves as one of them.


Footnote

  1. When, according to the builder’s works schedule, it should have only taken two months.

Image source

  1. A pause in construction, author’s own image.
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Irregular site meetings

Most of the time, the construction of an architect-designed project proceeds according to plan. Construction unfolds on time. The construction documentation is clear and free of ambiguity. The trades perform their work skilfully and conscientiously. There are few surprises, be they physical or financial. The builder, owner and architect maintain a positive working relationship.

Sometimes though, construction does not proceed according to plan. Through negligence, disagreement or accident, a project is derailed. The derailment might last a moment in time, soon forgotten, or it might endure the entire project, poisoning both the process and relationships.

We have experienced and survived a number of derailments. They are stressful, sometimes expensive and always fractious. They test the good intentions of everyone involved.

What follows is the 4th of eight disaster lessons from site. We ask what went wrong and review what we’ve changed in our practices to prevent it from happening again. An archive of the series can be accessed here.

4. Irregular site meetings

site meetings

What happened

The project was located an hour and a half’s drive south of Melbourne. The builder’s construction schedule required that he be on site on irregular days, making regular site meetings difficult to coordinate. Consequently, site meetings were never arranged, with most questions addressed either via phone or the occasional meeting in Melbourne.

What happened next

Talking through construction details on the phone was far from ideal, particularly in terms of maintaining clear paper trails for decisions, but it was manageable. If this had been the only hardship, the real issues created via the lack of site meetings likely would never have been revealed.

However, while the project proceeded well during the early stages of construction, progress slowed substantially during the finishing trades. This was not specifically related to the absence of site meetings, but without regular, face-to-face opportunities for communication, the lack of movement on site grew increasingly frustrating for the clients.[1] The relationship between the clients and builder thus became tense and, caught in the middle, this tension began to affect us also.

As the final weeks of the project stretched out across months, the lack of personal contact became exponentially problematic. We found ourselves acting as mediators between clients and builder. We relayed messages back and forth constantly and had the same futile conversations over and over again, all while absorbing the dismay of our clients as if by osmosis.

Why we think it happened

The builder’s request to avoid site meetings, and our readiness to agree, came from our shared misapprehension that they would inconvenience the construction process rather than facilitate it. Indeed, reflecting on other projects, and our sense that builders sometimes itch to end our meetings and get back to the “real” work, it’s likely this belief is not isolated.

The lesson we learnt

For this project, the rural location of the site combined with the builder’s sporadic presence there were enough for us to let site meetings slip off the radar. In hindsight, the driving time required to get to and from site would have been more than compensated for by the benefit of having regular opportunities for clients, builder and architect to meet in person.

The lesson we learnt therefore is to insist on site meetings, every two weeks at least, throughout the entire duration of the construction process. We would add that this should be the case even if progress is for some reason retarded or delayed: the builder is driving progress, but it is only through the combined efforts of builder and architect that he can navigate also.


Footnote

  1. The clients continued to live on site during construction, which exacerbated their frustration. Having the client so close to the building process is another disaster waiting to happen, though is unfortunately outside our control.

Image source

  1. Irregular site meetings, author’s own image.
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An unsubstantiated provisional sum

Most of the time, the construction of an architect-designed project proceeds according to plan. Construction unfolds on time. The construction documentation is clear and free of ambiguity. The trades perform their work skilfully and conscientiously. There are few surprises, be they physical or financial. The builder, owner and architect maintain a positive working relationship.

Sometimes though, construction does not proceed according to plan. Through negligence, disagreement or accident, a project is derailed. The derailment might last a moment in time, soon forgotten, or it might endure the entire project, poisoning both the process and relationships.

We have experienced and survived a number of derailments. They are stressful, sometimes expensive and always fractious. They test the good intentions of everyone involved.

What follows is the 3rd of eight disaster lessons from site. We ask what went wrong and review what we’ve changed in our practices to prevent it from happening again. An archive of the series can be accessed here.

3. An unsubstantiated provisional sum

provisional sum

What happened

As the name suggests, a provisional sum is a nominal allowance within most fixed price building contracts that relates to a portion of a project that is not yet known. Typical examples of such sums might be a supply rate for bathroom tiles still to be selected, or an item of joinery not yet documented. We try to keep provisional sums to a minimum, as they represent an unnecessary financial risk to our clients.

In this instance, the builder requested a portion of the works be removed from the fixed component of the contract and relegated to a provisional sum. The works involved new pool fencing to an existing pool. The fence had already been thoroughly documented, but the builder was struggling to lock down a price, and both he and our clients were keen for him to start on site as soon as possible. The builder provided an estimate for the fence – around $12,000 – and we accepted his request.

What happened next

The builder started on site. Some months later, he submitted a fixed quote for the pool fence based on a simplified version of the originally submitted documentation. We were shocked to discover that despite this simplification his quote was more than double his original estimate.

Our analysis of the builder’s quote proved our design to be economical, and his fixed quote to in fact be fair and reasonable. It was his estimate that was flawed and, unfortunately, the nature of provisional sums made his error our client’s problem. They were ultimately put in a position where they had to spend $15,000 over their expectations to build their fence.

Why we think it happened

The builder was not sufficiently diligent when preparing his estimate for the pool fence, we think in large part because he had no need to be. He had already more or less won the tender, and the estimate was intended for a provisional sum, with no requirement for him to honour it. His calculations for the materials and labour required for the fence were both seriously undercooked, errors he was able to later rectify.

The lesson we learnt

It is rare for a provisional sum to be prepared by a builder, but in the event one is, the lesson we learnt is it should always be cross-checked for accuracy. This can be done by analysis of the breakdown of the sum, or even better, by comparison against other builders’ or a quantity surveyor’s estimates.


Image source

  1. An unsubstantiated provisional sum, author’s own image.
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Progress payments by stage

Most of the time, the construction of an architect-designed project proceeds according to plan. Construction unfolds on time. The construction documentation is clear and free of ambiguity. The trades perform their work skilfully and conscientiously. There are few surprises, be they physical or financial. The builder, owner and architect maintain a positive working relationship.

Sometimes though, construction does not proceed according to plan. Through negligence, disagreement or accident, a project is derailed. The derailment might last a moment in time, soon forgotten, or it might endure the entire project, poisoning both the process and relationships.

We have experienced and survived a number of derailments. They are stressful, sometimes expensive and always fractious. They test the good intentions of everyone involved.

What follows is the 2nd of eight disaster lessons from site. We ask what went wrong and review what we’ve changed in our practices to prevent it from happening again. An archive of the series can be accessed here.

2. Progress payments by stage

progress payments

What happened

It is typical for a builder to claim payments for his work on a monthly basis, where the sum claimed corresponds to the value of the work undertaken in the past month. The builder instead requested that payments be made by stage. This involves regulated percentages that can be claimed at the completion of stipulated stages of construction:

Base stage – 10%
Framing stage – 15%
Lock-up stage – 35%
Fixing stage – 20%
Completion – 20%

Staged payments are larger but less regular than monthly payments. We recognised that this request likely related to the builder’s aversion to paperwork, but were unable to see any problem with it, so accepted his request.

What happened next

After the first few months of construction had passed, it became clear that the staged payments were a problem for the builder. They were simply spread too far apart. He might not have liked the paperwork involved with monthly payments, but the stop-start cashflow really hurt him.

This had two important effects:

First, he began to disappear from site for weeks at a time. Though the builder refused to provide explanations for his absences, we suspected he was taking on smaller commissions with fast turnarounds to keep the money flowing. These periods of non-activity on site stacked alarmingly, stretching what was supposed to be a nine month construction period out to 18 months.

Second, in order to reduce the money he would owe subcontractors, he began to take on specialist trades like concreting, plastering, plumbing and hydronic heating himself. He had to redo many of these, as his workmanship was not up to an acceptable standard. He also made errors that were impossible to rectify, things like bootprints in finished concrete surfaces and hydronic heating lines emerging crookedly from concrete slabs.

Why we think it happened

Though the builder never came clean with us or our client, we had no doubt that he was struggling financially. If the project had proceeded according to schedule, he would have received his staged payments once every two months or so. As the schedule stretched further and further, there were times when four or five months passed without payment. The poor cashflow created a vicious cycle that stretched the project timeline and impeded cashflow further.

The builder was not capable of extricating himself from this cycle. He had dug his own hole and everything he did, in terms of both his poor scheduling and inattention to quality, only served to make the hole deeper.

The lesson we learnt

This experience was powerful proof of the importance of cashflow on site. Consider: on a $500,000 project, the builder’s profit margin is around 15%. In other words, he pays and receives $425,000 in order to earn just $75,000. He also has to pay suppliers and subcontractors before our client pays him, the gap between which might be as much as two months. He must therefore keep the money coming in or the cycle will disintegrate.

The lesson we learnt was simple: we no longer accept project payments by stage. Even if the builder is paperwork-shy, and we must produce additional paperwork to compensate, we insist on monthly payments.


Image source

  1. Progress payments by stage, author’s own image.
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