A downturn in economic activity offers a moment to take stock of one’s values and reassess the future in the face of changing expectations.
A reassesment of value in architecture may not seem like a comforting prospect to many architects. To trigger this process of reflection, a report, “The Future for Architects?,” released in 2011 by the Royal Institute of British Architects (RIBA), projected towards the year 2025 by asking forty architects who will be designing the built environment at this time. The report came with some chilling news. It stated that “the medium-size design–led firms were under the greatest pressure” in this new economic climate. Is it possible that within two decades we may witness the demise of the medium-size architecture firm?
The hyperbole attached to the report underplayed the cyclical nature of the economy. In particular, during the boom time prior to the Global Financial Crisis (GFC), many architectural practices, especially those of medium scale, expanded. In the post-GFC contraction, these offices have had to fight harder for new commissions to support the previous expansion. This has seen many practices spread their base into other sectors. This flux has caused consternation, with new players entering sectors outside their usual remit, and (anecdotally) there seems to be a trend of a decrease in fees tendered for architectural services.
The competitive situation of winning work on fees is a major issue for current practice, and is exacerbated by architectural economies of scale that can spread risk (and its consequent cost savings) when going to tender. But despite this economic position, each studio size demonstrates its own advantage in delivering the service of architecture.
Over the following pages, several architects discuss their particular office model and its comparative advantage. Andrew Maynard states that his studio of five could become a networked practice by plugging in to larger firms to deliver the design front end. Kerstin Thompson says the largest projects in the world have a dozen or so people working on them (and that this cell structure of one design director per dozen can be seen across all scales of practice). She believes her practice size — ten — means that she can always offer the “A team.” James Jones and Elizabeth Watson-Brown think their move from offices of around twelve to two-hundred-plus people at their current firm Architectus allows them to focus on design while having the muscle and security of a big practice. Woods Bagot joint group managing director Ross Donaldson sees a sheer advantage in an economy of scale to capture and pool design research.
While each firm has its own advantage, it seems there is currently a trend in the market towards small, networked offices, or the restructuring of large-scale architecture practices into professional consultancies, where architecture becomes delivery orientated and super efficient. The AECOM team in Brisbane believes that the large-scale matrix of various internal consultancies demonstrates the ability to overcome complexity through an atmosphere of collaboration, and that it is a structure within which architecture is elevated to a core component of problem-solving across industries.
Richard Johnson of Johnson Pilton Walker remarks that practice size should not be subject to fluctuations in the market; he believes that it shouldn’t be a question at all. We choose our future, and our making. Yet it is clear from the discussions overleaf that there is one scalar advantage that benefits everyone — the architecture profession working together.
Andrew Maynard Architects
Every small office has big ideas, but for Andrew Maynard, it is not necessary to grow in size to take on large-scale projects — it could be done by plugging in to larger practices.
TIMOTHY MOORE You have worked for Six Degrees, Woods Bagot and for Richard Rogers in London. After having a small-scaled practice for almost a decade, have you felt a desire to rejoin a larger practice in recent years?
ANDREW MAYNARD I have thought about it. There was a recruiting agency who came to me and said that they had a couple of firms who were looking for a design director. Through the agency, one firm invited me into the office for half a day. They needed, in their words, a design guru, someone who floats around the office driving the basic design principles of each project. I thought the role sounded more like an in-house design critic. The large practice wanted to increase its design credibility and they had two proposals: one, recruiting my entire team into the office, or two, buying my studio and plugging us in to particular projects. As a concept, I’m not against that. It’s an opportunity to do bigger work, and I wouldn’t want the burden of managing this work. But it is difficult to believe I would have the autonomy that this office promised. And I am terrible in working for other people; I do not take instruction well. But the idea of design guru did appeal to me, swanning around the office. From my experience working in larger practices, however, the director, or the “personality” that the office develops, often becomes the salesperson that is out there pitching for new work to maintain its size. It’s self-fulfilling.
TM There is also the self-fulfilling notion that a practice of five people limits the scale of the projects one can take on.
AM Not necessarily. We were invited to put in a submission for three forty-storey towers in Malaysia, and there was a job in India for a thirty-two-storey housing development. Whatever the scale, we provide our expertise at the design end by providing ideas. What I like about the current size of Andrew Maynard Architects [AMA] is that in a small office, nobody can hide. You know if someone is wasting time, or not performing, so it’s much more efficient. We often sack people who do not perform. We tell new employees that they will be lucky if they last three months in the office. In a big office, you can hide through the week. I went up to eight staff, but it became about managing people. Having eight people, I was very conscious about plugging in new projects to pay all of the wages. When a large project comes along again my aim is to enter a joint venture with a larger office. We would provide the design expertise and ensure that it is rigorously executed. The larger firm would supply the people power and all of the management that is required around the functionality of that workforce. Larger offices need nimble firms like ours as they strive to become more agile, adaptable and deal with fluctuations in the market. If a large office is akin to a regiment of grunts, then we would be the special forces unit. Why bother with the clumsiness of the large when you can send a small crack team in to sort it out with quality and efficiency?
TM As you cannot hide in your own office, do you feel the pressure to work longer hours? There are no extra resources to pull onto a job.
AM No, as we avoid taking on too much. I can easily say no to projects simply because the overheads of running a small practice become almost inconsequential. This is vastly different to a large office. We do not work past 5.30 pm. Going from five to eight staff, office and project administration often tied me up. Now, my co-director Mark Austin runs the projects and I come in and push a certain agenda in the design. I have great freedom to spend time researching and exploring ideas. That’s how we remain competitive, we can continue to invest in the production of ideas without thinking “I should really be out there spruiking for work.” Are larger firms winning big projects because of their innovative ideas? I think they are winning them on low fees. A larger firm has the ability to compress and absorb costs. A small-ish practice cannot compete on the fees. I have engineered AMA so that there is very little pressure and therefore I can charge what we want at the moment (within reason). When I had eight staff we needed the work, and had to lower the fees. Now we’re in a position to say it’s 15 to 18 percent or we are not doing it.
Kerstin Thompson Architects
Kerstin Thompson believes that even the largest job may only require a crack team of ten.
TIMOTHY MOORE Is the size of your practice something that is based on circumstance, such as the projects within the office, or is it a conscious decision?
KERSTIN THOMPSON The current size of the studio is ten and it has fluctuated been between five and twelve people. Ten is my preferred size; there is no intention to be larger. Ten is the classic ratio if there is one principle: I can keep an overview of what everyone is working on. Being in one big open room, I’m a part of that space, constantly jumping between all of the projects. Likewise, everyone pitches in as they like to. At the peak of the global financial crisis, that was a moment when it shrunk back down to a core team of six (that is with the office through thick and thin). When we have a question about size and our capacity from prospective clients, we point out that if you look at the size of design teams of very large practices throughout the world, they are rather small — for example, Christopher Kelly [the director of Architecture Workshop in Auckland] worked in a team of twelve people on the $1.4 billion Kansai International Airport Terminal by Renzo Piano. There is a problem in thinking of equating project size with the size of the office: despite the fact that a client may get comfort from going with a large practice where there are hundreds of people, in fact, only a small group will be working on the project. With Kerstin Thompson Architects, like any small practice, we can always offer the “A” team.
TM There is a commonly held viewpoint that size mitigates risk. How do you deal with surety when you compete against larger-scale practices for public projects?
KT This is one of the biggest disincentives to small practice as the overheads are incommensurate with your fee base and there’s a bottom line of overheads you need in terms of insurance and compliance, especially when working for various authorities, such as government. We have our insurance cover at five million dollars. I have argued to government that often the project value does not require more than one million, so five million is more than ample although ten million is often the minimum required. That’s a large overhead for a small practice. It’s a misalignment of the actual risk and this almost blanket clause for tendering out. I’ve seen 250-thousand-dollar jobs tendered out with ten million. There are insurance council guidelines that I often quote in these situations.
TM With this focus on risk aversion, does the provision for quality also receive similar attention?
KT In theory, yes. Most government sector clients have a pre-selection process. They will say to us: you are pre-approved so the quality question is out — it all comes down to the fee. We are finding the winning fee is often half the fee we submit. We have had the recent experience of tendering to a public sector client that we worked for five years ago. Five years ago, experience equated for approximately 60 percent of the selection criteria while the fees were 30 percent. The criteria now allocate 60 percent to fee and 30 percent to experience. So on recent bids we have been deemed “too high” despite our valued experience which has led, ironically, to this same client asking us to assist them in establishing their brief and expression-of-interest documentation so that they can obtain the best-quality outcome. To circumvent this situation in the future, we would prefer to see something like fee bands, where you would expect a price range for which you would receive a reasonable quality to be delivered.
TM The scale of practice submitting for the smaller jobs is changing too. In Australia you see the larger practices taking on a phalanx of small jobs like cafe interiors and pop-up shops.
KT In the last few years, we find that the larger-scale practices are running for jobs that we would not see on the list several years ago. Just last week, we submitted for a small-ish community centre — I was stunned to see the list of the practices that had submitted — there are some really large practices. We do not view the change in the market as a problem. Kerstin Thompson Architects has survived for this long, so we will continue. But we do not drop our fees: we push to maintain a sustainable level of fees.
Johnson Pilton Walker
One should not change their practice size at the whim of the market, says Richard Johnson. It should be of your own making.
RICHARD JOHNSON Our strategy is to keep the practice to a moderate size. We are about forty-five, and we have been between forty-five to fifty-five people for a long time. Occasionally, we are a few more or less.
We generally don’t chase work due to this desire for stability. We zero in on projects that are of interest to us; we enter a lot of competitions, and we have an established client base. We definitely do not like to compete on fees. Generally, we do not negotiate because we cannot: we need to support the way we work to produce good architecture. We encourage a broad diversity of project types, scales and clients and when a project interests us, adds to our experience or provides opportunities to experiment or trial ideas we may occasionally accept work that is hugely unprofitable.
TIMOTHY MOORE Do you see the current climate and its impact on various practices as cyclical or has something fundamentally changed within the constructed environment?
RJ Looking back over several cycles — I graduated in 1969 — there is nothing fundamentally unusual at this point in time. I do not believe in the death of the medium-scale practice. We are our scale by desire and by strategic planning. There have been many occasions where we have had the opportunity to get larger but consciously resisted, because I think our size suits us; we are less vulnerable in a downturn and it retains the enjoyment of practice. We also consciously do not take on too much work outside of Sydney. Only around 20 percent of our work is abroad, and it is focused in the Suzhou region of China.
TM There is a perception that Sydney is a difficult market for establishing a practice, and definitely with respect to procuring work. Is it easy to break into practice today?
RJ There was a period in Sydney, and you could go back through the issues of Architecture Australia to prove this, where the number of practices working on public projects would fit on one hand.
From 1985, when I began working in private practice, there has been a dramatic increase in the number of large, medium and small practices that operate on key projects in the city.
There are periods when we all get despondent, when we are not getting work, are not on shortlists or have lost too many competitions. It may be just where we are at the time but there seems to be always so many opportunities in Australia and our region.
The number of people who understand quality architecture and are prepared to go through an elaborate process to find an architect that suits them has increased. The City of Sydney’s design excellence competitions and the increased demand in all project types (large and small) for quality outcomes has had a significant impact and will continue to do so as our population increases, is more design conscious and demands more sustainable buildings.
Therefore, to conclude, each practice has to find its own way of operating in this context. JPW directors believe that for us, a sustainable practice is one that does not expand and contract to the whims of the market. We have made our critical judgement and choices as to the scale of our office, and the best way we can enjoy practice, produce our best work and train emerging talent to sustain our own office now and to sustain it when they leave us to start their own practices.
Elizabeth Watson-Brown and James Jones,
Last year, Elizabeth Watson-Brown merged her small studio with Architectus Brisbane while James Jones returned to Architectus Melbourne after working for small practices in Tasmania. For them, a larger practice orientates their skills towards the front end of design.
TIMOTHY MOORE Elizabeth, after twenty years, what was the catalyst to merge your studio with a much larger office?
ELIZABETH WATSON-BROWN One of the things that made me move from a studio of around ten people to a larger practice is that the regulatory environment is much more complex than when I began twenty years ago. It is one thing to handle the design of major public projects in a small studio of ten, but in terms of the actual production and handling the risk profile, it is expensive and exhausting to organize this infrastructure. As a single director, if you are taking all of that risk and responsibility in a big project, it becomes a challenge to keep all the other clients happy. With a small practice, clients expect an individual relationship: they want you, and they want you only.
TM As your practice began taking on larger scale projects, did you find that your time spent on design diminished?
EWB It’s a paradox that it does take you away from designing. The move to Architectus has been liberating in that way.
JAMES JONES Because previously you would be design architect, project architect, undertaking contract administration and potentially acting as contract superintendent. Then there’s marketing, communications, finances.
TM How is it shifting to a larger practice of a few hundred people? What is the structure and how is your time divided?
JJ Architectus is four medium-size practices that operate as separate businesses, which form one large umbrella company. We are design directors and there are fortnightly meetings with the other design directors across the practice; the link in the practice is the design directorship.
EWB It is manageable with four directors within each Architectus office: Brisbane, Sydney, Melbourne, Auckland. Around the directors, usually four or five teams will form. In a way, it is similar to the scale of practice I had. This raises the question, how do we define scale?
JJ I have an analogy. A small practice is like a nuclear family, two to six: parents and kids, or however you define your immediate family. The extended family is a practice of six to fifteen or so. Then it becomes a small community of twenty to two hundred. And if you get into the Norman Fosters of the world, it becomes a country town, from two hundred to thousands. Then they have their own gyms and cafes.
TM To push the metaphor: what is the difference between your former extended family and your new small community?
JJ I’ve moved from small practices in Tasmania. Morris Nunn and Heffernan Button Voss both had about ten people. The difference is that if you spend time in a small practice, you end up being a jack-of-all-trades: involved from the initial sketch to the detail to being on site. In a large practice, it is more dilute. My role at Architectus is at the front end to get the settings and first principles of design right. The advantage is that you see a broad spectrum of projects. Currently at Architectus Melbourne there’s a university campus, a shopping centre redevelopment, an office building, a police training facility, a school administration building and a fire station. We recently won a relocatable schools competition project worth approximately $250,000. It’s quite a rich range of projects for fifty to sixty people.
TM Was this always the case?
EWB To take Architectus Brisbane as an example, it formed as a practice around large public building works — particularly GoMA and the new courts buildings in Brisbane — and saw that scale of public building as its core interest. The paradigm has recently shifted quite radically; these types of projects don’t necessarily exist anymore. We are revisiting the practice’s model in this economy to recalibrate and refocus. We’re in a state of flux at the moment, which also relates to being in a state election year in Queensland.
JJ It relates to the global financial crisis as well and the constant change of economic (and climatic) conditions. Traditionally, practices had certain sectors of the economy as their core focus: health, education, residential, public, private. The GFC taught a lot of practices that if you try and confine
yourself to one, you fall very fast. Spreading the base to sustain larger practices is important, and this is opening up new possibilities. Still, we have recently lost a few jobs on fees, and some firms are quoting fees that make it impossible to make a profit. There are some much larger firms than us that are one-stop shops. It is difficult to compete against these practices due to their economies of scale.
An economy of scale allows Woods Bagot to invest 2 percent of revenue into the generation of research, which acts as a point of difference in a competitive marketplace.
TIMOTHY MOORE I received an email in my inbox last night promoting the latest Woods Bagot publication, The Business School — Issues for a New Future. It encapsulated Wood Bagot’s strong emphasis in particular sectors. In fact, BD Online listed Woods Bagot in the global top ten for business parks/offices, cultural, defence, hotels, leisure and masterplanning (based on income per sector). Many practices are diversifying to spread their base: is this something Woods Bagot is also doing?
ROSS DONALDSON In principle, we have stuck to the sector model. If we are going to put value to projects and leave a legacy, then our focus on sectors is key because it is our view that you need to dive deep into project typologies. In 2006, in order to do this, we decided to invest 2 percent of our top-line revenue in research with respect to these sectors. For this, we have been partnering with clients, industry, academics and drawing from within the firm.
TM With a “global studio” across several offices and diverse geographies, how do you manage the incubation and flight of ideas, as well as the making of architecture?
RD One of the really important characteristics of Woods Bagot’s structure is that it is not a hub and spoke; there is no headquarters from where directives come. We’ve built a disaggregated structure to fuel the change we need internally. If the marketplace is changing quickly, you need to be changing as quickly or you get left behind — you find yourself simply competing on fees. Flexibility and adaptability are key. Therefore you have to provide value. A small firm can provide value in terms of design innovation. On some levels, it’s easier in a small practice where there are one or two people driving the design and experimenting and being served by a small group. A large firm can do this as well providing it replicates some of the autonomous qualities of a small practice.
TM How do you find this with respect to your past? Just over a decade ago you had your own practice in Western Australia while being involved in academia.
RD I had a practice of six people in Perth up until 2001. That year I had an approach from Woods Bagot as I was undertaking work from interior architecture to large-scale urban design and they were interested in this dynamic. I went from six to almost one thousand people within a few years. One of the frustrations of a small practice is that you do a lot of work that doesn’t get built, and you get a feeling that there isn’t a legacy of what you bring to the world.
When I began with Woods Bagot, we were turning thirty million dollars a year; this was before Woods Bagot decided to grow. We quadrupled in size between 2006 and 2008. If we did not get to such a large scale we could not afford to undertake the research — we needed mechanisms to grow to afford the surplus of funds to invest in, and continually reinvest into the firm.
TM Then you have to maintain the size of the firm to continue at this scale; it’s a cycle. Has this been affected by the high value of the Australian currency? Has it impacted upon the delivery of services from Australia to overseas clients?
RD In principle, we do the work where the work is. We build full capacity in each region. We have fourteen offices across the US, Middle East, Europe, Asia and Australia. We overcome the strong Australian dollar because we are not trying to sell Australian services at an Australian price. We are selling North American services at North American prices, for example, and Asian in Asia. This is the advantage of the disaggregated structure. You can’t build local capacity unless you disaggregate the decision making. We were hit for a mighty six in the Middle East; we had three hundred people in Dubai and Abu Dhabi. We’ve been able to rebound with a “value proposition” — you have to bring something special times like this. And we believe it’s our ideas. We’ve seen great improvements in Asia where as a percentage of our global profit, it has gone from 5 percent to about 35 percent.
TM In Australia, do you see it as more difficult to maintain profit margins? Do you see a trend in the architecture profession towards becoming more competitive in terms of fees?
RD It is definitely a challenge. We have lost projects against quality competition where they have put in low fees. It could be because these firms essentially want to keep people in work, which leads to lower fees in the overall scheme of things. We are our own worst enemy as a profession. There are two ways to deal with it. One is to have a “value” to offer that isn’t fee based. We have won projects where we were the highest fee, but it doesn’t work with all clients. The key is to have a value-added offer which the client recognizes. In addition, we can bring our global experts to any project anywhere in the world driving quality and efficiency. The “global knowledge platform” we have created means that any project team can draw on the collective portfolio, also driving efficiency. Our Australian experience in laboratories can inform projects in Asia. Our high-rise expertise in North America can be brought to projects in Australia and so on.
TM You were ranked in 2012 by BD Online as the fourteenth largest architectural services firm in the world. With over five hundred architects, you are safely big.
RD Woods Bagot used to be stuck in the middle; we are not there anymore.
Cathryn Chatburn, James Dorrat and Mark Fuller,
The employees of AECOM globally could populate a small town, but the new Brisbane office is a much smaller agglomeration of local offices. Despite this, they argue, AECOM is beyond scale.
TIMOTHY MOORE As AECOM enters the Australian market, it is perceived within the architecture profession as being a one-stop shop. Who leads in such a large practice?
MARK FULLER AECOM is not led by an engineering team, an architecture team or anything else. Instead, it brings a range of people to the issue, and that premise is a challenge to us to make sure we have the required systems on board and then to integrate them. We don’t like to call it a one-stop shop; we prefer to see it as a constellation of expertise and answers for clients. We perceive that clients and commissioning bodies are increasingly facing more complex issues as our markets progress, whether they’re in emerging markets like South America, or in Australia.
TM This constellation of AECOM Brisbane is a rather new amalgam of EDAW, Maunsell and ENSR, among others. I wonder about legacies that come from the different personalities that moved into the office.
MF There is an interesting intermeshing of different connections and networks. To be frank with you, we all had to park our legacy aspirations. That included EDAW and Maunsell, Davis Langdon and everyone else who joined the team — a lot of us have got heritage in those organizations. It’s a matter of getting around the brand and understanding that AECOM is neither solely an engineering practice nor a design practice, it’s actually about trying to create a multi-disciplinary practice. It’s tough for a lot of people to leave things behind.
CATHRYN CHATBURN The merging of cultures generates its own interesting dynamics and challenges; it actually forces you to be quite agile, creative and open.
JAMES DORRAT And the new people who have started here have really been surprised at the openness across faculties and the integrated process. The studio that we work in is very free flowing and with not a lot of ego in it. It’s very flat in terms of what it is, and that assists with us getting to the end of each process, in a sense. I think people are surprised that there’s not that sort of “one hand follow me” feeling within the studio.
TM How does your experience at AECOM compare to your own trajectories in other practice constellations?
CC I started off in local government, believing that was where I could most effectively make the biggest contribution to communities. From this starting point I moved into private practice, where I’ve experienced a broad range of possibilities and models — small- and medium-scale practices of architects, planners and landscape architects. I try to bring the lessons from each to our current practice. Interestingly, working with a sole practitioner we were a team of two and we were based in a building that was shared by a lot of other interrelated disciplines. With the opportunity for discussion across teams, it was almost like the integral practices supported each other. In the small studio you’re everything from the IT manager through to the account manager through to the designer; in a larger practice there is more support, meaning you can step back and focus more on practice.
JD I’ve worked at several large architectural practices. I’ve also worked alone and that’s quite a lonely experience because I love being around other brains. I have a lot of freedom here because as an architectural firm we have no baggage: we’re very new. And the architectural core of AECOM in Australia is made of only fifteen people. I always say to my team, “Nothing is holding you back here, just because it’s a big organization doesn’t mean that you can’t do it, that’s a false perception.”
TM As you are a big organization, a network of collaborators, how do you define your scale?
JD It’s hard to define the scale of our architectural practice because we’re trying not to have a scale. In Brisbane, we’ve just started so we could almost, from an architectural point of view, consider ourselves to be a small architectural practice, but we are playing on the margins. We have to be different to others to be competitive. This poses a question back to us about what we are doing, which is to collaborate, to try to bring collective design brains to the table. I’d like to see other architectural practices embrace a similar sort of collegiate, collaborative manifesto rather than “we all seem to be undercutting each other at the moment.” I suppose what I’m trying to say is that as a practice we’re trying not to do that and we’re trying to actually seek different places and preach the gospel of architecture into different sectors. I think that bodes well for practice because it’s a widening of thought, it’s a widening of spectrum, it’s a taking of architecture to places it hasn’t been, which will result in better outcomes.
MF We can support a wide range of participants and again it applies in other parts of our business, too. We have specialist experts in a number of areas, for example in transport and economics. In many cases these specialists wouldn’t be able to sit on their own out in the market, but we can bridge the gaps in the market, or they can be directly built into projects. They’re kept alive that way, so we do have some strength to respond to the market. Our aspiration isn’t to be the largest architecture practice in Australia, it’s to maintain that level of integration and flexibility.
From a dossier in the May/June 2012 edition of Architecture Australia, on “The Economic Paradigm”.