Architecture - The Future

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Architecture - the Future
FAST-PACED TECHNOLOGICAL CHANGE, LOW-COST INTERNATIONAL PROVIDERS AND CHANGING PROCUREMENT METHODS ALL PRESENT SIGNIFICANT CHALLENGES TO THE PROFESSION. SO WHERE DO WE GO FROM HERE? ROBERT PECK OUTLINES THE ISSUES.

Recent trends in the development of urban design infrastructure have raised the question in many architects’ minds, "Where is my next job coming from"?. In addressing the question there can be no apology for the slightly technical response which follows because that’s the world in which we operate today.
Putting the "art in architecture" component to one side for the moment, architecture is no different to any other technology-based service industry and is facing, and will continue to face, the challenges and benefits of significant and regular technological change. These changes now occur every three or four months rather than every three or four years as has been experienced in Australia in the last decade! While the profession is facing technological change, the costs of supplying our services are being challenged in every respect by the advent of internet based service providers, with competition coming not only from Australian companies but also from skilled, low-cost provider countries, in particular India, Indonesia and the Philippines.
Clients - governmental, corporate and private - traditionally deal with architects on a personal one-on-one basis. As architectural companies grow larger (over 15 personnel), clients see only a small proportion of the architectural staff of that practice - around fifteen percent. The other staff are largely behind the scenes providing the "grunt" necessary to undertake the work. The threat to our profession is increasing as this "grunt" may now be provided from countries of low-cost origin, with a QA provision supplied within Australia.
Concurrent with these challenges, the delivery of urban infrastructure projects is changing in Australia. Governments and agencies are increasing the use of public private partnership - "PPPs" and other similar acronyms. These projects must be delivered by major balance
sheet constructors who are able to manage the delivery while taking some or all of the risk. Road, rail, health, education and office facilities are all candidate projects for PPP. Australia competes on a global basis within the finance markets for PPP funds sources. These sources compare risk and return in many countries not just in the regions of Australia. Large private clients are also beginning to embrace these delivery methods and hence the increasing influence of major funds in Australia.
The role of an architect in this rapidly changing context is also changing, just as the role of traditional developers is changing. Large funds and fund managers, who in the past have been risk averse and in general "wandered around aimlessly" looking for a place to invest, today and in the future, have and will become aggressive, opportunistic, informed and sophisticated.
The new funds take on more risk to provide better returns to their investors and look for natural partners in the infrastructure and development industries. Being of significant size they will use their resources to extract much better arrangements from the development community including architects.
Ten years ago these companies and funds hardly existed. They were usually take-out businesses satisfied with a lower risk and return strategy.
Five years ago these companies were seeking partners who had development expertise, for example, the ISPT/Westpac alliance on all ISTP properties ($400 million) and the C+BUS/Staged Developments arrangements (Westin Hotel Melbourne, Herald and Weekly Times site).
Today they retain their own staff and seek partnership

arrangements with established companies, particularly the large-balance-sheet builders who bring their expertise and their capital to these projects.
Some funds insist that in the future partners will need to bring capital together with their expertise in a true risk sharing arrangement, for example, Rosecorp/AGL site/C+BUS’s 100 hectare residential development in Sydney. While the bulk of the funds are likely to be applied through PPP type delivery and direct investments there will be, according to some funds, a role in the future for the "old developer" - the ideas person with little or no capital - but they will share a much diminished profit share in the process, as funds flex their knowledge and muscle.
The future role of the listed and unlisted property trusts in Australia remains unclear as the GST tax changes, as yet unresolved, will undoubtedly change the modus operandi of these funds in both development and PPP type projects.
The view increasingly held by many funds is that they will add much more value for their stakeholders "if they get the development process right themselves rather than relying on others".
Recent press indicating that Lend Lease were "getting out of property development" misrepresents the facts. They are becoming more sophisticated and running funds like their "Capital Enhanced Fund Series", which is designed to provide higher returns, and to utilise their market expertise within the various and extensive elements of Lend Lease. Returns on developments completed in this fashion are maximised through aggressive asset management and optimum sale strategies. Multiplex, Leightons and Grollo are others heading down this route. The Charter Hall/AMP joint venture is another example. So where does high-quality architecture fit into these processes which are directing their interests into health, aged care, education, commercial, industrial and general infrastructure projects?
For the bigger practice, the answer is that we will see fewer, but very large, architectural practices in Australia, which will dominate the market. They will form (and are forming) relationships on a national and international basis, utilising their expertise where most appropriate. This expertise is likely to be management and design expertise, with a blurred line between documentation and administration. The blurred line reflects the fact that architectural skills will marry with the fund provider/developer and with the major sub-contractors and suppliers through the use of internet based software that, of course, takes no account of the traditional boundaries between providers to the development industry. Alliancing type contract arrangements facilitate these new approaches.
A current major project example in this field is the National Museum, which has caused a complete rethink of the role of the architect. Major sub-contracted component like "structure" and "curtain wall" have been fabricated directly from design development stage 3D CAD drawings. The architect provides expert design control rather than producing many drawings, a large proportion of which are later replaced by shop drawings. (The museum is, of course, the result of an international design competition.)
In the housing sector, governments are recognising the need for financial and structuring incentives to overcome the deficiency in the supply of affordable housing. Should these matters be adequately addressed there is likely to be a significant increase in interest in these areas by investment funds. Landcom in New South Wales is leading in an analysis of this problem and has involved advisers and industry groups to assist. The problem remains large and unresolved but offers great potential for the architectural profession.
In the health area, where initial capital costs are usually only equal to annual recurrent costs, there are significant benefits to be obtained through better design combined with improved work practices. A new hospital project in South Australia is moving down the alliance process seeking to improve on the costly traditional process.
What is the future for the small practitioner?
Returning to the question of "art in architecture", the small practitioner will have many more opportunities by applying their design skills and forming internet based relationships with larger architectural practices on a project-by-project basis, as well as winning work through design competitions.
Just as the development industry is changing rapidly, the place of architecture and the role of the architect in Australia is also changing quickly. We need to be freer in our attitude towards sharing ideas and skills and more willing to become partners and leaders in a team based development process.
Notwithstanding any of the above, design competitions that are directed towards best practice solutions should be encouraged and remain the key focus for our profession.
No team member in the development process other than the architect can provide the vital ingredient for our future and present communities - quality design. No other team member is better placed to advise and guide the process on environment and life cycle issues. The challenge lies squarely with the architectural profession and the educators who contribute to it

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Published online: 1 Nov 2000

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Architecture Australia, November 2000

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