Architects and Money

We need to talk about the money.

There is an elephant in the drawing room. The Great Recession has exposed the great issue at the heart of Architecture and it has nothing to do with design.Any business that keeps secrets must believe those secrets to be so valuable they are worth hiding from the competition. Take the Coca-cola formula, the Google Algorithm or Microsoft's Source Code for example. If their trade secrets got out, these companies believe they will loose their market dominance.



The secret most architects firms keep from each other isn't how they design, it's what they charge.



It hasn't always been this way. Up until 1982 UK Architects had to apply the RIBA mandatory fee scale. There were problems with this system, not least it's inflexible and anti-competitive nature, which is why it was made illegal. It did have one big advantage however, architects fees were public and everyone (including the competition) knew what every Architect charged.The professional culture was based on the assumption that, all fees are the same but all Architects are different. We accepted that some architects were better designers than others.We got rid of mandatory fee scales so that consumers could have choice, but how can someone make an informed choice when they don't know the price? A free Market needs free information in order to operate efficiently. Consumers must be able to draw a comparison between the end product and what it costs in order to establish it's value. Architects are in the habit of publishing pretty photos of their projects but keeping quiet on what it cost to achieve that project.By taking our fees out of the public domain and making them secret we have made money the single greatest issue in the profession. By hiding our fees we thought we could focus solely on design but, paradoxically, hiding fees focused so much attention on money that, over three decades, we have changed the basic assumption at the heart of the profession.



Nowadays, all architects are assumed to be the same, it's just the fees that are different.



Let me illustrate the point by describing a situation familiar to any Architect.The phone rings in your office, it's a potential client. They have seen your website or some promotional material. They have land and money and want to build the type of building you specialise in. Are you interested? Of course.The potential client then tells you they have been looking around at other local Architects and they want you to submit a competitive fee bid for the job. Are you still interested? Lets assume that you are.There are several implications from this very common situation.1. The potential client has no clear idea of what an Architect might charge. Their response, which is understandable, is to organise a tender.2. The client assumes that, provided the firms involved in the tender do similar work, the fee is the only decisive item.3. The Architects first instinct, assuming they want the project, is to reduce fees to a minimum so they can win the tender.4. There can be only one winner. Several Architects will waste valuable time chasing a project for no benefit.Now lets replay that same situation in a world where Architects aren't secretive about money, a world where every architects firm publishes a guide to their fees.The potential client finds several local Architects on-line. They rule out the practice on the high street specialising in commercial work, who's fees are high. They consider a sole practitioner who's fees are low but reject him because they worry he isn't adequately resourced. The client settles on a number of small firms and quickly notices their fees, while different, are very similar. The client, now seeing what the going rate is, proceeds to choose their Architect based on quality, experience and personality. Cost is no longer an issue, the elephant has left the drawing roomThere are several benefits to this situation.1. The client has a clear idea of what they will be charged. A tender process isn't necessary.2. The client, seeing that the difference in fees is slight, looks for criteria other than money to separate the Architects.3. The Architect, not having to engage in a tender, won't have to reduce fees to a minimum4. There is still only one winner but no ones time is wasted.


The World Is Changing.



Architects in the UK dropped mandatory fee scales in 1980's because the world was changing, becoming more competitive. The system of fee secrecy that we currently have has been with us since the 80's but the world is changing again, it's becoming more open.People who were children in the 70's and 80's have grown up in a world where change was the only constant and the biggest change has been the free movement of information over the Internet. Unfortunately, some older Architects see the Internet as an inconsequential plaything, a refuge for 20 year old guys with poor social skills. That may have been true in 1995 but it's now 2013 and that 20 year old is 38, has graduated from college, got married, had kids, owns a house and may even own a business. In short that guy is a potential client and his demographic is increasing every day.This open generation expects free access to information. They compare and purchase a growing variety of products and services on-line; Cars, holidays, insurance, food and clothes. When they realise they need a product or service, their first instinct is not to ask a friend, its to ask Google.Many Architects have embraced on-line life. Three years ago I received negative comments on the Facebook forum for Architects Against Low Pay, stating that the Architects Fees, which I publish on my website, are too low and that I ought to be charging fees in line with the 'old' fee scale. How was I supposed to know that the old fee scale is still the going rate, was there some kind of gentleman's agreement I wasn't told about?I would like to remind these individuals that I am on the same side as them and would love to charge higher fees, who wouldn't? Better for me, better for the profession and better buildings for our clients. But how do I know that theses guys aren't then going to undercut me? If they published a guide to their fees this wouldn't be a problem.As a profession, we can draw on the experience of our older members who will recall a bygone world where our fees were publicly available. RIBA used to publicise our fees for us, for legal reasons, they can no longer do that. I respectfully suggest that we seriously consider doing this for ourselves.