YouTube advocacy

Emoji; Emoticon; Dislike; Red

Late on Wednesday night, a colleague alerted me to a perturbing YouTube video uploaded by the Association of Professional Builders.

Despite its official-sounding name, APB is in fact a marketing agency that “specialises in helping building companies to increase their leads, sales, profits and professionalism.” Its goal is to assist builders to stay in business, which it facilitates through online training, blog articles, sales tools and video content.

Most of the videos focus on the owner / builder relationship, and leave architects out of the discussion entirely. The most recent offering breaks this mould however, and is entitled Why you shouldn’t use an architect to design your new home.

With an opening like that, you can see why I was unsettled.

The video has so far amassed just over 200 views, and has earned two thumbs up and nine thumbs down. These statistics are hardly evidence of an earth-shattering audience, but on principle I felt compelled to respond to the false claims made by the presenter and APB co-founder, Sky Stephens.

So instead of going to bed I wrote a characteristically lengthy rebuttal, which I hope will give some much needed perspective to any future viewers that happen to stop by. I consider this an act of minor advocacy on behalf of the architecture profession, and have decided to reproduce my comments here on the off chance APB decides to delete the video.

Dear Sky,

I am an architect and I’d like to challenge three misleading and unsubstantiated claims made in your video:

  1. That “80% of all architectural plans never come to fruition”
  2. That architects only focus “on what a home will look like”
  3. That architects “rarely factor in the cost” of construction

Let me unpack these claims in order:

  1. How do you know that 80% of architect-designed houses don’t get built? I strongly doubt that you can provide the research paper that supports this claim. Even if it were true, how can you possibly assert that the only reason projects fail is because of cost? Common sense and my own experience suggest that there are many causes for a stopped project: the owner might receive a job offer overseas, she might decide to move closer to her children’s school, she might use her savings to open up a business instead, her parents might get sick, she might not receive town planning approval, she might want a large four bedroom house but can only afford a small two bedroom one. The design and construction of a house is a complex undertaking, with many factors influencing a successful outcome.
  2. You infer that the definition of design is restricted to what a house looks like. This misses the much broader reality of architecture, and unhelpfully diminishes the rich and complex truth of the design process. Architects are indeed lovers of beauty, but this is in no way the only driving force behind good design. Design includes working out how a house functions, how it suits her client’s lifestyle, how it performs thermally in summer and winter, how it addresses town planning and building code requirements, how durable it is, how well it will adapt to the changing needs of her client’s family, how it addresses the history and culture of its place, how sustainably it sources materials, how well it opens up to the back garden, how soundproof it is, how watertight it is… The list is endless, and an architect addresses each and every item in the pursuit of good design.
  3. An essential part of the architectural process is the management of an owner’s budget. An architect is trained to understand what it costs to build, and provide reliable financial advice to her client. This regularly involves seeking input from either a quantity surveyor or a friendly builder, and designing in accordance both with what her client can afford and what the construction industry charges. This approach is not only ethically non-negotiable, it makes good business sense: an architect cares deeply about her client and about the house she designs for her, why would she jeopardise this by ignoring the budget? She is also invested in the future success of her architectural business, which she can best safeguard by helping her client build a house she loves and can afford.

I’d like to challenge you about the motive behind this video. Advocating for the value of builders is a wonderful thing, and worthy of doing. I have worked with many good builders, and would happily recommend the experience. Surely you can find a way of promoting builders without having to defame an entire profession of intelligent, hard-working, creative and valuable individuals?

Your advice sounds counter-intuitive because it is. Let me ask you this: would you choose your medical specialist before you know which illness needs curing? Would you head straight to the cardiovascular surgeon before confirming that you actually have a problem with your heart? Going to an architect first is the best decision an owner can make, because it’s the architect who will interpret her unique brief and transform it into a place to call home.

I offer these comments in the spirit of constructive criticism. Everyone deserves to get out there and advocate for the things they believe in, and I have no interest in preventing you from doing this. I’d welcome the chance to discuss any of my comments further with you, and hopefully help you offer more thoroughly researched content to your audience.

Let me finish on a more positive note, and mention a piece of your advice I support wholeheartedly. I agree that an architect can achieve the best design outcome for her client only when she collaborates with a great builder. A successful collaboration between architect and builder from early on in the design process is an essential ingredient to an excellent outcome. Yes, the primary goal of the architect is to provide creative vision, but this job is actually shared by the builder. Likewise, both builder and architect have important roles to play in ensuring a house is practical to build.

My philosophy is this: design doesn’t stop at sketch design, it continues all the way up until the moment the builder hands the keys back to the owner. I regularly find myself sketching details on timber stud offcuts, and watching on while builders do the same. An open and inclusive mind is the secret to this success, and why I love being an architect.

Regards,
Warwick.

I invite all my readers to head over to the video and add your own thoughts in the comments section, or just voice your disquiet via a cheeky click on the thumbs down button.

One last thing. When I woke up this morning, I thought of a better analogy than my cardiovascular surgeon reference. I’d hate for it to sink without a trace, so here it is:

Game of Thrones; King's Road; Northern Ireland; Ireland; Forest; Road; Analogy; Movie; Film; Television

The analogy of the forest

A team of builders are laying a new road through a forest. The tradies are the people pulling up trees, flattening earth and pouring asphalt. The builder is the person coordinating the tradies and making sure the road is straight. The architect is the person who arrives on site a week into construction and says, “You’re building in the wrong forest.”


Image sources:

  1. Thumbs down, author’s own image.
  2. Game of Thrones King’s Road, sourced from Tourism Northern Ireland.

The challenges of geography

Melbourne; Map; Mapping; Geography

There are many residential architecture studios in Melbourne whose portfolios are concentrated within specific geographical regions: the south-eastern suburbs, the inner-north, bayside, the Mornington Peninsula, Ballarat. I live in Carlton North and seem to see Robert Simeoni signs on front fences everywhere. Zen Architects does a lot of work in and around Northcote. Jolson Architects has nailed the Toorak market.

I don’t believe there’s any data quantifying the prevalence of this phenomenon, but common sense would suggest it’s widespread.

Architecture is a physical act: it leaves a mark on the built environment that acts as a type of calling card for future clients. Locals walk past a construction site, come across an ad in the local paper, or see the architect’s studio on a Google Maps search, and are pulled into the architect’s orbit. Each project develops its own powerful gravitational field that inevitably leads to more local enquiries than those from further away. The enquiries become projects, they produce new gravitational fields, and so on.

This chain reaction is useful for an architect, it’s a reliable pipeline of familiar projects that help establish a strong local presence and consistent portfolio. But what happens when the snowball never gets started in the first place?

Melbourne; Map; Mapping; Geography; Data

A geographically dispersed practice

For reasons unknown to me, both the enquiries and commissions of Mihaly Slocombe are and have always been widely dispersed across Melbourne and rural Victoria.

Our studio is located in Brunswick East, and while we have a growing number of projects scattered across the inner-north, we are also working on or have completed projects in Albert Park, Ashburton, Bentleigh, Brighton, Broadmeadows, Camberwell, Caulfield, Collingwood, Doncaster, Eaglemont, Frankston, Hawthorn, Heidelberg, Ivanhoe, Keilor, Kensington, Kew, Malvern, Melbourne CBD, Moonee Ponds, Richmond and Rosanna.

Our version of local therefore is a sprawling 300 or so square kilometres, and that’s just our work in and around Melbourne.

Each blue dot on the map above represents one of our current or past projects. They tell an interesting story in and of themselves, most importantly this surprising insight:

  • Excluding two projects in Frankston, all of our urban commissions have been less than 20km from the city.

But what about enquiries that never get off the ground? And how do they relate to the ones that do? What else might a thorough mapping of all 160 of the enquiries we’ve received to date reveal?

Melbourne; Map; Mapping; Geography; GIF; Animation; Data

Mapping our enquiries

We divide project enquiries into four categories: projects are commissions we win, with signed fee proposals; declined are fee proposals that are declined by the client; aborted are enquiries that never get so far as a fee proposal; and rejected are enquiries that are declined by us.

Overlaying the map for each category reveals a number of interesting things:

  • The pattern of our enquiries is reflected in the pattern of our commissions. In other words, there is no bias towards a certain part of Melbourne whose enquiries generate a disproportionately high or low number of commissions.
  • Of the four project categories, aborted has the highest density outside the 10km and 20km rings.
  • Excluding one project in Keilor, all of our urban enquiries (and commissions) have been from the northern, eastern and southern suburbs.
  • Our rural enquiries have been dispersed across much of Victoria, but our rural commissions have been mostly concentrated on the two peninsulas, Mornington and Bellarine.

These observations corroborate what was previously a set of educated intuitions about the pattern of our enquiries. They provide specificity too – We previously had no idea that the 20km ring is so important, nor that the western suburbs are so underrepresented amongst our enquiries. Most actionably, they have given us firm metrics to assess the likelihood of a project proceeding based on geography and other factors, and have helped us flesh out what we now call the three hurdles.

The hurdles are simple really: when a potential client first makes contact, we aim to discover as much as we can about her and her project. In particular, we want to know three things:

  • Where is the project located?
  • What is the broad scope of the project and what is the budget?
  • What are the client’s design ambitions?

The answers to these questions help us be pragmatic about our enquiries. We know statistically that enquiries outside the 20km ring are almost always non-starters. We also happen to know that projects with lower budgets are expensive for us to take on (more on this in a future blog post). And we know that clients who have strong preconceptions about their design outcome aren’t well suited to our openly creative design process.

If the client stumbles on two of the three hurdles, we can be confident that the project is likely to end up a yellow dot. Asking the hard questions early, and knowing the geographic shape of our portfolio, help us spend less time on projects that don’t lead anywhere, and more time on projects that do.

Victoria; Map; Mapping; Geography; GIF; Animation; Data

Challenges and opportunities

Our dispersed portfolio has meant a few challenges for our growing practice, some of which are only just becoming apparent as we hit our seventh year in business:

  • We are less visible. Our fragmented street presence across Melbourne means we are much less likely to make serendipitous connections with passersby.
  • Our portfolio is less coherent. If all of our projects were renovations to terrace houses in the inner-north, clients with that sort of project would be able to easily understand what we do. For us, a new house on a vineyard, a small sleeping pavilion and a renovation to a 1977 Kevin Borland house are too unrelated to paint a comprehensive picture of who we are and what we do.
  • Our growth curve is slower. The key quality of a localised portfolio is that it generates momentum. For us, we are only just beginning to return to suburbs where we’ve worked previously. In the meantime, all of those missed enquiries in far flung places were commissions that a localised practice might have won.

It’s not all bad news though, far from it. A dispersed portfolio has a number of benefits that I think will begin to matter more and more the longer we’re in business:

  • We have broad expertise. Having worked across many parts of Melbourne, we have developed an appreciation of unique topographies, prevailing weather patterns, demographics, histories, building stock, culture, and local council requirements. This makes us better placed to keep working across Melbourne, including into new suburbs.
  • We are hard to pigeonhole. Our well-rounded experience resists the pigeonholing that goes hand-in-hand with a localised portfolio. Our portfolio is full of unusual projects, and is only becoming more so. I expect this will open future doors for us that would be shut to a more homogenous practice, including assisting us to diversify into new project typologies.
  • We don’t get bored. Perhaps most importantly, the diversity in the locations and clients of our projects make our work more intellectually stimulating, and ultimately more enjoyable.
Mihaly Slocombe; Architecture; House; Evening
Hill House, 2006
Mihaly Slocombe; Architecture; House; Renovation; Kevin Borland; Evening
Chamfer House, 2015

Reflection

Understanding why our practice has evolved this way is difficult. Architecture is largely opportunistic. Clients approach us, not the other way around, so we work on whatever the world brings us. This leads to all sorts of unpredictable connections with potential clients.

Let me illustrate:

Our Hill House project led to the commission for Chamfer House despite the former finishing five years before the latter starting, the two sites being located 30km apart, and the two clients never having met. How can they possibly be linked? Well, in 2006 Hill House was completed, then in 2008 longlisted for the WAN House of the Year award. The longlisted entries were exhibited online. A television scout for Canadian television programme, World’s Greenest Homes, discovered the project and got in contact. In 2009, the house was filmed and the show aired in Australia on the ABC. Then in 2011, the show aired again on repeat, and our soon-to-be Chamfer House clients saw Hill House, liked it, and tracked us down.

The important thing to acknowledge here is that we had zero control over all of these steps. What’s more, I’m sure many of our projects would reveal similar stories if probed.

Twenty one years ago, Nicholas Negroponte predicted that “the post-information age will remove the limitations of geography. Digital living will include less and less dependence on being in a specific place at a specific time.”[1]

Negroponte’s argument centred around the death of cities, which of course has proven not to be true. But there is nevertheless a profound realisation in his prediction. Our cities may be thriving more now than ever before, but they’re not what they used to be. As Carlo Ratti has observed, “the digital revolution did not end up killing our cities, but neither did it leave them unaffected. A layer of networked digital elements has blanketed our environment, blending bits and atoms together in a seamless way.”[2]

The layering of the digital world over the physical has, for us, allowed us to make connections in new and geographically diverse ways. I can’t explain the spread of our early projects, but more recently our strong digital presence on Houzz has untethered us somewhat from the limitations of geography. Reviewing our last five projects won from online enquiries proves this point:

  • Ivanhoe East – AIA find an architect service
  • Princes Hill – Google
  • Northcote – Houzz
  • Kew – Houzz
  • Murrindindi – Houzz

In past generations, it was perhaps more difficult for an architect to develop a portfolio without relying on local personal networks and word of mouth. The Internet has by no means replaced these pathways to new projects, but they have certainly increased the chance of chance encounters. Now there are two worlds to navigate, the physical and digital, and in each there are opportunities for an architecture practice willing to master them.


Footnotes:

  1. Nicholas Negroponte; Being Digital; Hodder and Stoughton; 1996
  2. Carlo Ratti; Digital Cities: ‘Sense-able’ urban designWired; 2nd October 2009

Images sources:

  1. Map of Melbourne, author’s own image
  2. Melbourne data: project category, author’s own image
  3. Melbourne data: all categories, author’s own image
  4. Victoria project data: all categories, author’s own image
  5. Hill House, design by Mihaly Slocombe, photo by Emma Cross
  6. Chamfer House, design by Mihaly Slocombe, photo by Andrew Latreille

Houzz Pro membership

Social media, Houzz, Database, Photos, Logo
Houzz, pronounced /howz/

In August last year, Erica and I signed Mihaly Slocombe up to the Houzz Pro membership programme. This placed our sponsored project photos into the organic search streams of local audiences, increasing the visibility of our business in and around Melbourne.

We were required to commit to the programme for twelve months, a huge financial leap for us considering our marketing budget had previously been $0. When our membership expired recently, we took the opportunity to ask ourselves whether it has been worth our while. Has it increased the number of leads coming into our studio? Have the leads been qualified? Have they resulted in any commissions? Ultimately, we needed to work out whether we should opt in for another twelve months.

The Houzz platform is one I’ve discussed before, though I’ve not explored the membership programme, nor analysed the benefits and challenges it has brought to Mihaly Slocombe. The following discusses our history with the platform, our reasons for joining the paid programme, and the results we’ve seen from our investment.

Let me start at the beginning.

Houzz, Mihaly Slocombe, Homepage, Profile, Houses, Residential design, Architecture, Photos

The beginning

I created a Houzz profile for Mihaly Slocombe in October 2013. It had been three years since we formed our studio and I was eager to increase our presence online. Even then, Houzz had a database of photos well into the millions. I had the feeling that we were hitching our wagon to the Amazon of residential architecture and figured it was better to be flying along with them than left behind in their dust.

At that stage, Houzz was based only in the US. It would be another year until the launch of a dedicated .com.au site, so the majority of our early traffic came from overseas – the US primarily, but plenty of European countries too.[1]

During this period, our profile developed some very strong organic traction. Amongst our two dozen or so project photos, it was the Basser House walk-in-wardrobe that attracted the most attention. To date, a whopping 18,000 people have added it to an ideabook (the Houzz equivalent of an Instagram like). It has also led to us winning the Houzz design award three years in a row.

The popularity of this and other photos earned us a constant presence. Like Google, the Houzz search algorithms reward popularity with more of the same. Despite the youth of our studio and small collection of photos, we were beginning to pop up everywhere.

Houzz; Melbourne; Launch; Party; Architects

Houzz in Australia

In August 2014, Houzz spread its wings and officially launched its Australian domain. I attended the Melbourne launch party, and watched during the presentations (with some pride) as the Houzz staff used our profile as a case study.

During the drinks and canapés that followed, I met an architect whom I knew was enjoying just us much organic traffic as we were. I was curious to discover how she was going with her profile, and whether she’d won any projects through it.

Up until this point, our popularity on Houzz had not converted into any paid work. I had dedicated countless hours to answering technical questions from Houzz users, and even fielded a modest number of project enquiries that went nowhere, but I was just spending a lot of time selling our services to people who weren’t really buying.

I assumed my new friend would have had a similar experience, but discovered instead that she’d won sizeable projects with proper budgets and clients interested in good design. I was amazed. What was she doing that we weren’t? And what was it about our profile that attracted people with unreasonable expectations about the architectural process? We discussed this divergence for most of the night, but I left without any real understanding of why her success was translating into fee-earning commissions and ours was not.

Houzz project, West Brunswick, Renovation, House

If at first you don’t succeed…

In May 2015, we received our first commission through Houzz. An Italian couple were returning to Melbourne after many years living abroad and wanted to renovate their family home in Brunswick West. It struck me when they got in contact that this was one of the marvels of Houzz: a couple flicking through pictures on their laptop in Rome could discover us on the other side of the planet, and then commission us for a project located just around the corner from our studio.

Still, it was tough going. By this point we had racked up a total of 14 enquiries through Houzz (including a couple of exciting calls from interstate), but only one commission. Not a good success rate. I realised then that the risk of the Houzz platform was that it replaced our relationship-based marketing approach with one more akin to internet shopping: high volume, low conversion.

So we were still spending a lot of time on our Houzz enquiries without much to show for it. In 2015, Houzz accounted for 43% of our enquiries, but only 14% of our commissions. It was the age-old business conundrum: we were spending the majority of our time on the minority of our clients. Something needed to change.

Houzz, Melbourne, Map

The programme

In August 2015, we received a call from Houzz. With the dedicated .com.au website now a year old, the Houzz Pro programme was being introduced to Australia. The call didn’t surprise me. I had wondered a number of times when Houzz would monetise its platform. With over 35 million unique visitors each month, professional users were getting access to an enormous audience for free.[2]

The deal was intriguing and came at just the right time for us. We were enjoying great organic traffic to our profile, but in contrast to my launch friend, the vast majority of it was international and of no real value to our business. Our photos were appearing on someone’s screen around 300,000 times every month, but only getting clicked around 90 times. A lot of people were seeing our work, but a tiny .03% were engaging with it.

The Houzz Pro programme proposed to change this model. It would guarantee our appearance on the first page of photo and profile searches for any user within the Melbourne CBD and immediately surrounding suburbs, and thus push us in front of many more local eyes.

Our hope was that more local connections would be the ingredient we were missing, the thing that would convert all my effort engaging with the Houzz community into paying projects. We still thought long and hard about it though – as I said, it was a big commitment for us. In the end, we figured a year of membership fees wouldn’t kill us, and our business needed to take a risk to continue to grow. We set a KPI for ourselves: an acceptable payoff would be one substantial commission, or two smaller ones.

We were the first architecture studio in Melbourne to sign on.

Houzz; Houzz Pro; Advertising

Our decision to join

Residential clients are notoriously difficult to connect with, particularly for younger practices without the reputation and bag of awards enjoyed by established studios. If our portfolio were centred around restaurant fitouts, we could probably work out ways to connect with restaurateurs. But houses are hard. Our clients are everyone and no one.

Houzz provides this connection. Better yet, the Houzz Pro programme provides a local connection, one that is based on images of our design work. In late 2015, our organic traffic was already excellent, but unproductive. The programme promised to top up our organic international audience with a far more engaged Melbourne one.

We also felt that Houzz was a safer bet than Google or Facebook advertising. Houzz users are a subset of the general population, a pool of people already interested in residential architecture. In marketing terms, this meant the leads we hoped to get through Houzz would be more likely qualified.

Finally, we sensed that Houzz is an unstoppable train rolling out across the planet. The Internet is hardly growing less connected to our daily lives: Houzz is a part of this trend, a huge marketplace we’d be foolish to ignore.

Bangkok; Chatuchak; night market; market; colour; night

What happened next?

In August 2015, we paid for our first month of membership to the Houzz Pro programme. The good news was that we didn’t have to wait long for leads to come knocking: we received 3 enquiries that month. The bad news was that none of them turned into a project. And neither did the next 10. It wasn’t until March 2016, and our 14th Houzz enquiry since joining the programme, that a lead converted.

Five more leads rolled in without result, but in July our 20th enquiry came good too. Exactly as we’d hoped, both projects are sizeable, with proper budgets and clients interested in good design. We’re working on sketch design for them as I write.

When our membership came up for renewal in August, we did so without hesitation. We had expected the slow start, had even been warned about it by our Houzz account manager, but it seemed now that we had gathered a bit of momentum.

Project; Lead; Enquiry: Client; Houzz

Project; Lead; Enquiry: Client; Houzz

Some data please

Since our renewal three month ago, the enquiries have continued to arrive. Two more have converted into commissions in just the last couple of weeks.

Examining the 14 months of our Houzz Pro membership, I calculate that 50% of all enquiries, and 20% of all new projects, have come through Houzz. These figures are both improvements on our pre-membership results, particularly the gross number of enquiries. Pre-membership, we received one enquiry through Houzz every 55 days. Post-membership, we’ve received one every 12 days.[3]

The main downer is that Houzz leads continue to convert less often than our other marketing activities. 20% of projects from 50% of enquiries is much better than it was previously, but still not great.

I think there are two reasons for this: first is the varied nature of the leads we receive – many have unrealistic budgets and come from people curiously not that interested in good design. We’ve realised that we can’t do much to stop these enquiries, but have at least worked out how to politely decline poorly matched commissions. Second, there’s the issue of trust, or more pointedly, the lack of trust. While a potential client recommended by a mutual friend tends to inherently trust our expertise and creativity, someone contacting us via Houzz can’t tell us apart from a bar of soap. The Internet makes it too easy to get in contact, and thus too easy to never return a phone call. Building trust with a stranger takes time, something we don’t typically have when we’re trying to win a project.

That said, the projects we’re now winning through Houzz are very exciting. Exactly as we had hoped, they’re for clients interested in design, with decent scopes and realistic budgets. Qualitatively, the projects have the same spread as those that arrive through other means: they vary in size and budget, in geography, client and design ambition. For me, they prove that Houzz offers a viable model for lead procurement.

Has the number of leads coming into our studio increased? Yes
Have the leads been qualified? Yes (well, at least more often than before)
Have they resulted in any commissions? Yes.

So, we had to wait patiently in the beginning for our membership to reap a reward, and both then and now must spend a lot of time fielding tyre-kickers. But I am in no doubt that the Houzz Pro membership has helped our business grow. For the success we’re seeing thus far, it’s worth it.


Footnotes:

  1. I know this because occasionally we receive a comment like this: “Die fensterläden sind ein echoer hingucker!”
  2. Houzz Facts; Houzz; 2015
  3. It’s important to note that this success isn’t just due to upgrading to the Houzz Pro programme. We put constant work into our profile, uploading new projects, managing photo metadata, answering user questions, contributing to discussions etc. The programme puts us in front of more eyes, but we’ve made sure what they see is worthwhile

Image sources:

  1. Houzz logo; copyright Houzz
  2. Mihaly Slocombe Houzz profile; copyright Houzz and Mihaly Slocombe
  3. Houzz Melbourne launch at Meizai; August 2014; copyright Sushii Photo
  4. View from street of Mihaly Slocombe’s first real commission sourced through Houzz; author’s own image
  5. Houzz Pro programme, Melbourne CBD coverage; copyright Houzz
  6. Houzz Pro programme; copyright Houzz
  7. Chatuchak night market in Bangkok; sourced from Shop JJ; author unknown
  8. Project leads through Houzz; author’s own image
  9. Projects through Houzz; author’s own image

Explaining incremental tasks

There are three traditional methods by which an architect can charge fees to her client: the percentage fee, lump sum fee, and hourly rates. Inspired by the lean startup strategy, there’s a fourth method that’s emerging amongst younger practices: incremental tasks.

This is the last in a series of five articles that will assess the benefits and disadvantages of the four fee methods. It will analyse each from the points of view of both the architect and the client, and ask how well they tie an architect’s income to the value of her labour.

An archive of the series can be accessed here.

Architecture; Architecture fee types; Fees; Money; Gold

Incremental tasks

Overview

The architectural fee is split into a series of discrete tasks, each charged as a miniature lump sum fee. The intention of this method is to break a project down into very small components, with a single deliverable for each.

The tasks might include things like building a physical model of the design, or preparing a town planning report, or writing a construction specification. Typically, the tasks will require a unique combination of time and expertise to complete, so are likely to be charged at different rates. Across an entire project, there would easily be as many as 50 tasks that require anything from a couple of hours to a couple of dozen.

Transparency

At the beginning of the project, the architect presents her client with the list of tasks required of full architectural services. Each task is accompanied by its own price tag. Some might be essential e.g. a sketch design floor plan, others might be optional e.g. a physical model. Like ticking the boxes on a room service breakfast menu, the client is then empowered to select which tasks she wants her architect to perform.

There is an inherent transparency to this process, as it demystifies an otherwise long and complex architectural process. However, the elegance of the room service menu works because there are only a dozen items and a handful of choices to make. An architectural services menu will have many more of both, which carries the risk of bamboozling the client with too many choices. It’s important therefore for the architect to provide clear explanations of each task, and the implications of not ticking certain boxes.

Fairness

The essential benefit of the incremental tasks method is that the architect gets paid for every task she completes and only the tasks she completes. If the client decides partway into the process that she does in fact want a model to show her family, then she already knows how much extra it will cost her and is probably comfortable in paying the asking price.

On the surface, it seems that this is the perfect way to calculate an architect’s fee.

Dig a little deeper, and it becomes clear that like the lump sum fee, incremental tasks aren’t easily able to adapt to changes in design scope. If the brief at the outset of a project is for a modest 150sqm house, but this expands to 200sqm during the sketch design phase, the time required of subsequent tasks is likely to be higher than first anticipated. This introduces the hassle, likely compromises and possible conflict associated with fee renegotiation.

Not having used this method across a full project before, I’d welcome any reader feedback on this issue. Fixing it would make this method substantially more appealing.

Design

The incremental tasks method is one championed by architectural consultancy firm, Blue Turtle Consulting. I attended a seminar of theirs four years ago, an experience I blogged about here. Their argument is that a client presented with fee options is one more likely to value the services she is provided, and more willing to pay for extra services when required.

I don’t have a problem with this position at all, indeed I applaud it. However, there are many parts of architectural services that aren’t negotiable. Offering any of these up as options for a client to not tick risks the architect either delivering a subpar service or surrendering control over the results of her own design process. It seems simple enough to remove a fittings and fixtures schedule from the architect’s responsibilities, but what if the she can’t stand the fittings selected by her client?

Combined with the limitations of the method in adapting to changes in scope, I don’t believe it is well suited to high quality design outcomes.

Ease

By breaking a project that takes many hundreds of hours over many months down into small chunks, it becomes much easier for the architect to calculate how much time is required for each. She still needs to be careful not to shoot too high or too low with her assumptions, as this will either lose her the commission, or win her the commission but cost her dearly. However, the risk of the former is reduced at least as the client is able to deselect as many increments as she likes to bring the fee in line with her expectations.

Suits

Given the greater responsibility placed on the client in determining the services her architect is to perform, incremental tasks best suit projects where the client has worked with her architect before. This might be a developer who works regularly with a single architect to deliver many small (or large) speculative projects, or even a private client with experience in the industry.

Service or product

The incremental tasks method is strongly tied to the service offered by the architect, though this is mitigated by the calculations she is required to perform at the outset to determine how much each task will cost. A fittings and fixtures schedule for a $5m mansion will be substantially larger than one for a $500,000 renovation, thus will be charged at different rates.

Advantages

  • It’s fair. The architect is paid for the tasks she performs, no more and no less. This established a clear relationship between the work done by the architect and her fee.
  • It’s empowering (for both client and architect). The client is able to choose which tasks her architect will perform and which she won’t. Likewise, the architect has a mechanism in place to request more money when required: “Yes, I can design that extra piece of joinery for you, that will cost you an extra increment of $2,000. Are you okay with this?”

Disadvantages

  • It’s fragile. Like the lump sum fee, changes in scope that affect already agreed-upon future tasks are hard to renegotiate.
  • It’s inflexible. With the tasks required of the architect set in stone from the outset of the project, she is disincentivised to decide on a whim to change her process or build that model after all. Doing so would undermine the very basis of her fee structure.
  • It’s risky (for the design). With ample opportunity for the client to save a few dollars here and there, the architect risks not having a say in something that might actually end up having a strong influence on the quality of the design outcome.

 


Image source:

  1. Incremental tasks, author’s own image.

Explaining hourly rates

There are three traditional methods by which an architect can charge fees to her client: the percentage fee, lump sum fee, and hourly rates. Inspired by the lean startup strategy, there’s a fourth method that’s emerging amongst younger practices: incremental tasks.

This is the 4th in a series of five articles that will assess the benefits and disadvantages of the four fee methods. It will analyse each from the points of view of both the architect and the client, and ask how well they tie an architect’s income to the value of her labour.

An archive of the series can be accessed here.

Architecture; Architecture fee types; Fees; Money; Gold

Hourly rates

Overview
The architectural fee is based on hourly charge-out rates. In its purest form this method is entirely open-ended, much like a cost-plus building contract. The client pays the architect for however many hours she works.

Alternatively, the fee may be capped for each stage. I have to confess that this variation has never made sense to me: the client receives the dual benefits of a fixed fee cap plus the possible upside of reduced fees, while the architect enjoys neither the certainty of a fixed fee, nor the risk-free security of hourly rates.

In another variation, the architect charges her fees in the form of a monthly retainer. She receives a fixed sum for each month irrespective of how few or many hours she works, but is guaranteed this sum for as long as the project continues.

Transparency
The hourly rates method is simple to explain, though its very nature makes it difficult to quantify a total fee. Capping the hours is one way to introduce an upper limit to the fee, and therefore provide greater certainty for the client.

Like the lump sum fee, it is essential that a clear scope of works be defined. In this case however, the onus is on the architect to provide ongoing reassurance to the client that the hours spent are all necessary. Regular updates via timesheet summaries are the best way to keep the client informed. Where there are client-requested changes in scope, these are easily accommodated by simply adding the extra hours to the total.

Fairness
Undertaking a project using the uncapped hourly rates method seems like it would be any architect’s dream come true: licence to use as many hours as she needs on a project, and be paid for each and every one of them.

Having had some experience with cost-plus building contracts before, I know however that this dream is not as shiny as it first seems. Every hour is likely to be scrutinised, counted and even questioned. This can imbue a project with a subtle undercurrent of distrust between architect and client. The latter is hardly going to suggest that more hours be spent on a task after all. By leaving the fee unfixed, it inserts itself as a topic of possible controversy for the duration of the project. Instead of discussing design, the architect and client find themselves arguing about process: how long a task will take, even why it needs to be done at all.

Design
In contrast to the pressure to use fewer hours, I wonder whether a blank cheque wouldn’t introduce a simultaneous element of laziness in the architect’s habits? With no theoretical limit to her fee, the architect is less likely to work efficiently, and less likely to produce good design. This will hurt the architect’s business in the long run: becoming dependent on an unlimited fee for one project can ruin the other, regular ones.

Ease
One of the key benefits of the hourly rates method is not needing to quantify the length of time required of a project at its outset. There is likewise no need to account for possible changes in scope, as these will just be added to the tally. The challenge is really distilled down to picking the right hourly rates, though using the general rule of thumb of 1 : 1 : 1 for wages : overheads : profit is a safe approach.

Suits
The hourly rates method is best suited for small design projects, where there is a low risk of a substantial time blowout, or for fragments of larger design projects, where the work required of the architect is for some reason unquantifiable. An example of the latter is the town planning process, whose unpredictable nature makes it perfect for hourly rates.

Service of product
The hourly rates fee has no relationship at all to the size, cost or complexity of the building being designed. While a highly detailed $1m house and a large though rudimentary $1m carpark might earn the same fee using the percentage method, the hours required would be markedly different for each.

Advantages

  • It’s risk free (for the architect). Charging by the hour means no unpaid work ever, and hence entirely risk free labour.
  • It’s easy. There’s no need for the architect to budget her time in advance. She simply does her work, then charges for it.

Disadvantages

  • It’s risky (for the client). Unless some form of hourly cap is established, the client carries all the risk for time and cost blowouts. Except for small or hard-to-quantify projects, I would argue this also makes it very unlikely a client will agree to this fee method in the first place.
  • It’s controversial. Leaving the fees open-ended makes them more likely to be a subject of ongoing discussion between client and architect, and hence possible argument.

This article has been published in conjunction with ArchiTeam.


Image source:

  1. Hourly rates, author’s own image.

Explaining the lump sum fee

There are three traditional methods by which an architect can charge fees to her client: the percentage fee, lump sum fee, and hourly rates. Inspired by the lean startup strategy, there’s a fourth method that’s emerging amongst younger practices: incremental tasks.

This is the 3rd in a series of five articles that will assess the benefits and disadvantages of the four fee methods. It will analyse each from the points of view of both the architect and the client, and ask how well they tie an architect’s income to the value of her labour.

An archive of the series can be accessed here.

Architecture; Architecture fee types; Fees; Money; Gold

Lump sum fee

Overview
The architectural fee is offered to the client as a fixed sum of money that covers the architect’s full services. It typically allows for minor variations to the project scope, for example less than +/- 10%, however any major variations trigger a renegotiation.

The methods used by the architect behind the scenes to calculate the lump sum fee are varied, from counting the number of hours or drawings required, to speculating on what the market will pay. As these assessments are often difficult to make accurately, it is common to use the percentage method as the basis for the fixed fee calculation.

Transparency
Like the percentage fee, the lump sum provides one all-encompassing number for the architect’s services. However, this number is a dollar figure rather than a percentage: it tells the client exactly how much her architect will cost from beginning to end. From the outset, this provides the client with great transparency.

An important caveat however is the requirement for a well-defined project scope. The lump sum fee is fixed only so long as the scope also remains fixed. Since it is the client’s responsibility to determine this, it is essential she does so thoroughly. The question of transparency therefore shifts from how much the architect will charge, to what she’ll actually be doing. Grey areas are best avoided: since there’s no wiggle room in the fee, the architect needs to explain very clearly to her client what that fee buys her.

Fairness
On projects where the scope of services remains unchanged, the lump sum method is perfectly fair. However, the nature of architectural projects is inherently uncertain. They’re likely to change in big ways and small, across every stage of their development. This is where the fixed lump sum becomes less attractive.

While it’s true that the lump sum fee can be renegotiated if needs be, this is easier said than done. I see two reasons why: first, it requires goodwill from both architect and client – if either feel’s she’s not receiving a fair deal there’s no hope for a successful negotiation. Even where the architect has a good relationship with her client, asking for more money can be a prickly topic. And second, negotiation implies compromise. As my barrister brother once told me, the very definition of negotiation means reaching a deal where neither party walks away happy. I experienced this on one of the few projects where my client insisted I provide a fixed lump sum fee. During detail design, the project scope ballooned by around 30%, but the subsequent renegotiation only saw me receive an extra 10% in fees.

So at both the macro and micro scales, the lump sum fee proves fragile. It works so long as the scope remains unchanged, but falls apart very quickly otherwise.

Design
Like the percentage fee, the lump sum method is an holistic financial model. This allows the architect to choose where she wants to spend more time and where less. The key consideration is whether the project as a whole is profitable.

Unlike the percentage fee, the lump sum offers very little wiggle room. With pressure to steer clear from a fee renegotiation, the architect is disincentivised to arrive at a design solution that requires extra work. It does not support the inherent exploration required of good design, and is likely to lead to expedient (i.e. poor) design outcomes.

Ease
Picking the right fixed fee to charge a client is difficult. The architect is caught between opposing forces: on the one hand, she wants to win the job, and thus make her fee as tight as possible; but on the other, she also wants to plan for the inevitable changes in scope, and thus make her fee as generous as possible. Somehow, she has to magically pick the perfect middle ground.

As someone fundamentally allergic to gambling, this is not a bet I’m comfortable in making.

Suits
The lump sum method is best suited to projects where changes of scope are less likely. This might be because good design is not desired (e.g. a factory), or because the project typology is extremely well defined or regulated (e.g. a school). It is particularly well suited to developer clients, who traditionally aren’t interested in thorough design exploration, and are less willing to shoulder the risk of an unfixed architectural fee.

Service or product
The lump sum fee straddles the middle ground between service and product. On the one hand, it’s derived from the project scope, but on the other it’s immune to the project cost uncertainty that comes from market-exposed construction pricing.

In summary:

Advantage

  • It’s safe (for the client). The lump sum fee provides the client with a fixed, quantifiable cost from the beginning of the project. As long as she keeps the project scope unvaried, she knows exactly how much she needs to pay her architect.

Disadvantages

  • It’s risky (for the architect). It requires the architect to cover herself for possible design variations, while simultaneously targeting her fee to win the project. Winning the project might simply mean she gambled too low, exposing her to considerable unpaid work.
  • It’s expedient. The fixed nature of the lump sum fee discourages the exploration and iteration that results in good design. Getting to a solution on the first pass is more important than getting to the right solution.
  • It’s fragile. As the source of scope changes is often hard to identify, charging extra fees for extra work can be fraught with tension. Even when a change clearly originates from the client, this doesn’t necessarily mean the client will be happy to pay extra. It works fine until suddenly it doesn’t.

Image source:

  1. Lump sum fee, author’s own image.

Explaining the percentage fee

There are three traditional methods by which an architect can charge fees to her client: the percentage fee, lump sum fee, and hourly rates. Inspired by the lean startup strategy, there’s a fourth method that’s emerging amongst younger practices: incremental tasks.

This is the 2nd in a series of five articles that will assess the benefits and disadvantages of the four fee methods. It will analyse each from the points of view of both the architect and the client, and ask how well they tie an architect’s income to the value of her labour.

An archive of the series can be accessed here.

Architecture; Architecture fee types; Fees; Money; Gold

Percentage fee

Overview
The architectural fee is calculated as a percentage of the cost of construction works. A large project generally requires more work than a small project, hence attracts a larger fee. It benefits from an economy of scale however, so the percentage itself is smaller than for a small project.

To illustrate:

  • A $1m project might attract a 10% fee, which equates to $100,000
  • A $1.5m project might attract an 8% fee, which equates to $120,000[1]

A further defining characteristic of the percentage fee method is that it automatically adjusts during a project if the construction budget changes. If the budget goes up, so does the fee, and vice versa.

Transparency
The percentage fee needs some explanation at the beginning of the client / architect relationship, however it’s simplicity makes this a relatively easy task. By keeping the client updated with fee summaries at each invoice, it is also possible to maintain transparency throughout the project. This is especially helpful whenever there’s a change in project scope: the percentage fee automatically updates to reflect the new budget, so should be communicated to the client.

From the client’s perspective, the main disadvantage of the percentage fee is its inherently unfixed nature. At the start of the project, there’s no real way of knowing for sure what the architect’s fee will total by the end.

Fairness
With its inbuilt ability to adjust to changes in scope, the percentage fee is at the macro scale a fair representation of the amount of work required of the architect. This helps the client too: as it’s ultimately up to her to determine the scope of the construction works, she is empowered with some control over the architect’s fee.

At a micro scale, the percentage method makes it hard for the architect to protect her fee base. In other words, small changes to the work required of her are often done without charging the client. It seems petty to ask for an extra hour of fees in the context of a couple of years of design services, but over the course of a project these small favours can add up.

As discussed in the opening article of this series, the most significant shortcoming of the percentage method is its susceptibility to fluctuations in the construction market. It exposes the architect’s fee to the unpredictable outcome of the tender process. This can mean she suddenly loses a portion of her fee, though more often than not it will be the client who must pay extra.

Design
Like the architectural design process itself, the percentage fee is an holistic financial model. It covers the architect’s services with a single, all-encompassing fee, thus giving the architect room to manage the process as she sees fit. If she wants to spend more time picking light fittings and less time building sketch design models, she’s free to do so. Any given part might be more or less profitable than another, but this is not as important as regarding the fee as a whole.

Ease
Without the Australian Institute of Architect‘s fee scales, it can be difficult working out how to pick the right percentage. This is particularly relevant for younger architects. Indeed, I can vividly remember a Process at Loop session a couple of years ago that descended into a mob-like protest when recent graduates vented their frustration at the profession-wide lack of guidance.

That said, I believe the percentage fee provides a younger architect with an easy, one-stop solution to determining her fee. She can use it get her practice underway, and work out the details of the actual tasks involved later. The percentage fee becomes easier to manage with experience.

Suits
The percentage fee method is best suited to traditional architectural projects with a decent construction budget, say $300,000 or higher. It is particularly appropriate for projects whose scope is poorly defined at the outset, but whose architect and client are interested in a good design outcome. This might be a renovation to a house or a restaurant fitout, where the design process is an evolving dialogue from start to finish.

Service or product
The percentage fee is fundamentally tied to the product i.e. the building. This means the architect represents herself as the facilitator or guardian of that building: she succeeds or fails based on its outcome.

In summary:

Advantages

  • It’s elegant. The percentage fee provides the client with a simple, all-encompassing number, there’s no need to keep track of the hundreds of tasks covered by the fee. This advantage applies also to a young architect without years of experience behind her. She is able to use the percentage fee method as a one-stop solution for determining her fee.
  • It’s flexible. It automatically adjusts as a project budget (and therefore scope) changes. This can be done without exposing the client / architect relationship to the tension of renegotiation.

Disadvantages

  • It can be unpredictable. The percentage fee method puts an architect at the whim of market forces well outside her control. If a builder on the tender list happens to be desperate for work and deliberately undercooks his tender just to keep his staff busy, then the architect’s fee is likewise diminished.
  • It’s conflicted. To be more precise, it provides room for an unscrupulous architect to extract unethical profits.[2] The percentage fee might incentivise the wrong architect to inflate the cost of the building so her fee is likewise inflated.
  • It’s too elegant. By presenting the fee as a straight-forward, all-encompassing number, it’s very difficult to vary it by small amounts. A little bit of extra work here and there tends to be done despite not having been budgeted for. In short, the architect ends up doing lots of work for free.

Footnotes:

  1. Disclaimer: these percentage rates are not recommendations, only examples.
  2. It goes against my values as both a professional and a human being to ever consider doing this, however as it’s a possibility that was recently raised by a potential client, I’ve included it for the sake of completeness.

Image source:

  1. Percentage fee, author’s own image.