Investment strategy

What’s the best way to win work, and how do you avoid giving too much for free?

A sobering statistic to come out of last year’s RIBA Business Benchmarking survey is that practices spent, on average, 11% of their fee earners’ time pitching for work. However, this figure could have been so much higher.  

 

Direct commissions

Last year, half of the new projects were won through a direct approach from the client, with no competitive process at all. This seems remarkably high in this tough competitive world. As you might expect, the percentage fell for larger practices but hovered around 45% for middle sized firms, and rose to over 60% in those with fewer than five people.  

As most small practices work primarily in the domestic market where repeat business is limited, word of mouth recommendations are critical. Larger practices, working in the corporate world and public sector, rely heavily on repeat business – last year, it accounted for between 50% and 60% of their new business.  Either way, quality of architecture and service play an important part in securing these valuable, direct appointments.  

How was the other 50% of new work won?

 

Fee bidding

Rather depressingly, 21% of new work was procured through competitive fee bids or financial tenders, ignoring design quality or an ability to deliver a project.  Interestingly, smaller practices were most likely to suffer this iniquitous approach, since the percentage fell substantially for larger firms.  Perhaps these tend to deal with more sophisticated clients who realise that price isn’t everything, or perhaps those with smaller projects (that tend to use smaller practices) were more prepared to take a qualitative risk.  Whichever, plenty of clients have no idea of the value design quality might bring to a project, buying architectural services the way they buy blockwork.  

If we are to snuff out this ridiculous way of procuring architecture, the profession needs to be far more persuasive when arguing there is more to architectural quality than aesthetics.  It must demonstrate that good architecture really can add value, in clients’ terms: affecting the long-term viability of a project; running costs and maintenance; the enjoyment and so productivity of building users; and,of course, the bottom line. 

 

Frameworks

Framework agreements supplied 10% of new work.  As expected, they were most familiar to larger practices; accounting for around 20% of the new work of those with more than 20 people.  However, many find that framework agreements can be more trouble than they’re worth. Anecdotal evidence suggests a framework offers no guaranteed work; worse, some clients have started requiring practices on frameworks to bid against each other, often driving fees down below agreed framework rates in the process.  It is worth understanding how a framework will run before embarking on the long slog of competing for this particular privilege!

 

Direct Commissions

This survey confirms that clients in the UK do not favour open design competitions.  Disappointingly, perhaps, for the smaller, new practices looking to make their names with a splash of brilliance, less than 1% of new work last year was won through open design competitions – and most of that went to larger practices.  Some clients did hold invited design competitions but these too favoured those with a proven track record.  Of the new work secured by practices with more than 50 people, 15% came via a procurement route that included an element of design; this fell to less than 1% for firms with under five people.  

The survey doesn’t tell us whether clients pay practices for ideas offered during design competitions.  It is likely that some do offer a nominal honorarium but few will pay a proper design fee as many still see it as a cheap and easy way to get ideas.  Certainly last year, 60% of practices undertook speculative design work for clients who did not pay them for their time or ideas. The largest practices were most likely to undertake this unpaid work, so it’s likely that many of the best architectural ideas being generated are, indeed, priceless – which is something to think about!


Caroline Cole is director of Colander Associates