Tag Archives: consultant value

August was made for Workin’! A major project out for tender.

What is it about August? Just when you think we’d all be off to the beach, the cottage, August seems to bring out the deadlines, and the best of our design studio and staff. We’ve just completed the tender documents for the University of Waterloo’s Health Services Expansion, working in association with Kearns Mancini Architects. The division of effort and responsibility throughout the design team has been excellent, and the quality of the documents really shows. It’s in the hands of the bidding contractors now, and in a few weeks we’ll be passing the torch to a new member of the team, the builder. We look forward to working with whichever of the 8 pre-qualified firms is successful.

For anyone who’s been part of a deadline for tender and contract documents, this might seem ho hum, but I’m still amazed at the huge amount of interrelated detail that goes into the set.

First of all, what is a set of tender and contract documents? Well, much like any contract, the set has to fully describe the contract requirements for the work, and how the work is to be undertaken, including all its administrative details. In the case of this building, it means drawings and specifications from:

  • the architectural firms (JMA and KMA), for the interrelated architectural elements
  • the civil engineer (K Smart and Associates) describing the site services, grading, and drainage
  • the structural engineer (MTE Consultants) for the building’s concrete and steel structure
  • the mechanical and electrical engineers (Jain and Associates) for all the heating, ventilation, plumbing, and electrical systems.
What does it amount to, for a $6 or $7 million expansion? Nearly a hundred drawings, an inch thick project manual full of details and schedules, and more than a thousand pages of specification, all crafted and coordinated into a coherent whole.
Thanks to Matthew, Krista, Diane, Kristin, and all involved. A great team effort.
Our work isn’t all sketches on napkins. Initial design and exploration is about a quarter of our effort on most projects, with the documentation of that design forming fully half of our work. Following the tender and contract award, the remaining quarter of our work involves administration of the construction contract to ensure that the Owner receives the quality and value required by the Contract.
So for this project at least, we’re 75% there. Construction will take more than a year, and we’ll keep you posted on how the project progresses through construction.

Architecture and Externalities: Our Achilles’ Heel

I’ve been thinking lately about the relationship of our profession, architecture, with other disciplines and working methods that address themselves to solutions, recommendations, and decision-making. Specifically, I’m thinking about our profession’s attitude to “externalities” in the solutions we propose for our clients.

In earlier posts on this blog we’ve discussed the architect’s working method as one of balancing and juggling priorities. This accent on the balance of things, on relationships, distinguishes our profession from many activities, and distinguishes architecture from building. Here’s a link to that discussion, called “What is Design“, that we posted last September. We believe that our complex world needs these skills, and seek to apply them to our projects and for the benefit of both clients and the public.

There’s a fundamental flaw in our profession’s approach, however. It has to do with our attitude to issues and priorities that other participants in the project process see as outside the decision-making box, where we think they’re inside. This attitude sets us apart from many other participants in the project process, and often leads to our lack of involvement in the first place. It’s hard to hire and pay for someone who isn’t concentrating on your priorities to the exclusion of all else. That’s only fair, in a world of customer expectation.

Let’s look for a minute at this concept of “externalities“. In short, an externality is a consequence or effect that sits outside the box, not taken into account in the design of a decision, or product, or process. Classic economic examples relate to the imposition of public costs through private action, such as the air pollution caused by our decisions to commute long distances and separate land uses across our cities. The air pollution is an externality in our decision equation. Its consequences are borne by all of us, separate from my cost of commuting.

Architecture is a profession that notionally includes a role for ideas of public good and public benefit in the designs and decisions we create. We are allowed to practice as a self-regulating profession precisely because we are tasked with bringing these issues to the table in our work. Other project participants (the investor, the builder, the building inspector, the engineer for a particular piece of the building) advocate for one or two issues, and see everything else as external (and thus not taken into account in their recommendations or requirements). Architects are trained for a larger view, and mandated by law to include many issues of public good (even only if at the level of minimum standards of fire safety, energy conservation, and accessibility). Adding to this burden is our concern for the effect of our projects and decisions on the quality of our communities.

How many disciplines  allow so few “externalities” in their work? This is one of the reasons that architects are recruited for so little work in our communities. Too much baggage!

Here are some examples, even from within the public professions themselves.

The medical doctor designs solutions for a patient’s health without regard to cost. That is an externality to the public health system. The doctor doesn’t take into account that spending a public dollar on this treatment may mean that someone else gets no treatment at all. The health system is designed to make this someone else’s problem, not the doctor’s.

The lawyer advocates for her client’s point of view whether it’s a good one or not, and sometimes regardless of fact and truth. Someone else needs to argue the other point of view. If it never gets presented (think OJ Simpson), too bad. The other point of view is someone else’s responsibility. That’s the legal system. Lots of externalities there.

For building projects, investors focus on their return, often using very short term thinking. If the project is being sold immediately to others (such as a condo or flipped development project) then long term issues such as quality of construction and concern for building operating costs are treated as external to the decision-making process.

Building projects, especially private investment projects, involve a pile of external consequences:

for users, the public, for subsequent owners,

and for the sustainability of our society and planet as a whole.

Our problem as architects is that we somehow can’t stop looking at these issues, and trying to juggle them in the design solution. This is often in direct contrast to others in the decision-making team, who want the solution focused more narrowly. That’s why they don’t hire us unless they are required by law to do so.

This is the fundamental tension in our profession. We spend large amounts of time and resource to juggle issues in design solutions that others, including our paying customers, see as externalities. Our fundamental flaw (the Achilles’ Heel of the profession) is that our advocacy for integrated, quality, balanced solutions means we pay attention to things that others do not see as important to the task at hand. Given this approach, and the largely capital-investment-driven world we live in today, why would we be hired at all?

As we move forward in building our communities using private investment initiative, this dilemma isn’t going away. It’s likely to get worse. My only consolation is that the architect’s method of integrated, holistic thinking, and our ability to juggle lots of often contradictory externalities, is going to be needed at some point. I hope we get there before a system based on isolated solutions collapses under the weight of its external effects. Wish us all luck.

We’d like to know your thoughts on this subject. It applies to many circumstances and projects, in all kinds of sectors. I’m sure we’re not alone in balancing and thinking about these challenges.

Designing Our Way Forward

I recently reviewed some of the documentation we produced last year while searching for a new team member for our design firm. As part of the exercise, we asked our shortlisted candidates to submit questions to us, and we shared our answers with all candidates during that phase of the search (which they found refreshing and interesting).

One of the questions put to us was about the downturn of 08 and 09, and how we saw ourselves going forward as a firm. In rereading it this week, I find our answer as apt as ever, so I thought I’d share it.

The recent uncertainty of our economy affected everyone …….

what would you say are the significant strengths, challenges, opportunities

and threats your firm faces within the next five years

and what strategic plans have been set to address them?

My answer at the time, and even now, is this.

I believe the strength we have, as a profession and particularly as a design firm, is our ability to think strategically and see possibilities for relationships and integration that others may not see. Others are trained differently, and often concentrate on a linear, causal linking of things rather than striving for non-linear, integrated relationships. I think the future is bright for our profession, and for design as a way of creating solutions. To succeed, however, we must pursue the opportunities where they arise, and expand the types of projects and situations where our skills can be brought to bear. Since our firm enjoys learning in all its forms, I think we are suited to this.

Our indebted and unsustainable society needs solutions that are integrated, that balance priorities rather than accomplish them individually, and that can make 3 out of 1 and 1 more than ever. Our resources will get scarcer and we will realize that wasteful solutions in whatever field, and solutions that simply pass along problems to others, no longer be sustained. I think we are well-placed to use our skills, as long as they can be appreciated in the marketplace for the value they have. Everyone values product, but great processes are not always supported willingly. We have to make a living to be able to continue offering service.

Architects love what they do, and price themselves very cheaply. We often fight over the work and undercut one another on fees. We really enjoy and believe in what we do, so sometimes we give it away. That’s an enormous problem. The profession often overpromises and constantly overdelivers on important project issues that the client may not even be aware of, while potentially underdelivering on some significant and obvious issues. Think of how consumers buy a house. It’s not usually for the great (or not so great) but unseen construction. It’s often for the skin deep finishes. The appearance of quality can be different from real, longlasting value, but the architect has to deliver them both. Our project role is very central and we are often imposed upon by all sides in the construction equation, from contractor to owner to authority to technical subconsultants. Economic downturns cause everyone in the project chain to cut things even closer to the bone, and cause clients to look for the cheapest way forward in the short term. Those two actions don’t make for longlasting, sustainable buildings and cities of quality.

Our strategy is to consistently seek opportunities (whether in building projects, urban projects, development, or even object and graphic design) that allow us to demonstrate the value of “thinking better, to build better, to enjoy the benefits”. Our clients work hard, and appreciate the indepth understanding that they get from rolling up their sleeves alongside us. The pool of activities that architects are involved with is so small that we are better off pursuing projects at the pool’s edge, and enlarging the pool, than fighting over the contents of the present pool. Our strategies are hopefully tuned to do that.

What are your experiences in the face of these challenges? We’d love your feedback.

Good Design is Good Business

Numerous studies over the past decade have touted the popular phrase “Good Design is Good Business”. But with such an intangible product, how can you know that good design will be “good” for your business?

With all the great things we know design can do for your business (such as increase productivity, reduce turnover, increase sales, reduce building maintenance costs and many more) it can be difficult for designers and firms to understand the reluctance to invest in design. Perhaps you never knew what design can do? Ask Apple. They will tell you.

While the most notable studies on the topic have come out of the U.K, there is increasing recognition throughout the Globe about the connection between design and business success. With all the information available online, finding the answers you need can be daunting, but here’s a bit of an overview.

A 2005 report by the UK Design Council pointed out the main flaw to most reports relating design and business. It states: “All worthwhile plans and projects need to be based on sound evidence.” Most people in considering their business plan fail to account for how good design can benefit them, based on a lack of evidence connecting the two concepts.

In 2007 the same council published the Value of Design – Factfinder Report, summarizing the results of two pieces of research, clearly demonstrating the value of design for businesses.

The report can be found online at http://www.designfactfinder.co.uk/.

Some of the most remarkable and positive findings include:

–       businesses that see design as integral don’t need to compete on price as much as others;

–       almost half of all UK businesses believe that, over the past decade, design has become more important in helping them maintain a competitive edge;

–       businesses where design is integral to operations are twice as likely to have developed new products and services;

–       two thirds of businesses believe that design is integral to future economic performance;

–       over two thirds of manufacturers believe its worth investing in design in their sector;

–       businesses that add value through design see a greater impact on business than the rest.

There are real life examples of good design resulting in good business in top earning global giants such as Apple, RIM and even Target. Think about the digital media market- Apple continues to dominate despite slightly higher prices for one main reason- quality design that keeps consumers coming back.

Think about the role design played in creating the ‘environments’ in some of the top money earning companies such as Lululemon Athletica, Starbucks, and BMW. All use design to portray their image, and reinforce their corporate brand, all which increases profits = $$$.

Design can help your business convey an image, create an atmosphere and make your company unique in a world of increasing competition. Design is proven to significantly improve sales, profits, and deliver a competitive edge to your business.

Design is what makes your space unique, makes your space functional, and can underpin success. Designers bring the knowledge, creativity and advice that can bring any project to life. Making decisions about projects involves budget, schedule and craftsmanship, and the intersection of these three priorities generates design innovation that can:

–       maximize the value of capital investment;

–       give you a cutting edge, quality product and service; and

–       save you money over the life of the building.

Rather than just creating appealing and original spaces, a well-designed building/space can result in cost savings for any business. Decreasing absenteeism, operational costs, and boosting moral, architecture is proving itself in the post recession world. Creating targeted approaches to the largest costs associated with operating a business such as heating and cooling, design can lower energy consumption and reduce costs.

A recently completed project by the Region of Niagara at its Recycling Centre applied these design based cost savings measures, creating an environmental showcase for the Region and providing a real life example of the benefits of good design. As an innovative solution to both the environmental and economic costs of regulating temperature within the plant, the design team installed solar chimneys, taking advantage of the suns energy to draw and exhaust hot summer air out of the plant, using natural ventilation principals to regulate temperatures and encourage airflow. Focused on efficiency and reducing operational costs, the re-design of the plant featured efficient lighting, and the installation of skylights resulting in a cost savings of over $12,000 annually. By installing geothermal, the design reduced the requirements for gas fired heaters in the plant by 75% achieving their goal of environmental sustainability, toward a vision for the facility in line with the basic principals of the recycling program which it houses. A major success, the Green Retrofit at the Niagara Recycling Centre acts as an example of innovation, and stands to support the phrase that good design is good business.

Although rarely associated in the minds of most people, architects can provide the design services to help you succeed. Drawing on extensive experience architects offer services that can maximize the value of your resources to achieve your goals for the present and the future. Offering free sessions to discuss your project, and review a custom design through our ON Target TM packages are available to suit any needs- with no obligations.

The only question to consider in reviewing the literature and resources available is- Do you want to improve your bottom line?

At our office, whenever we want to be reminded of the power of good design for our clients, we call up our contacts at the Independent Living Centre of Waterloo Region, and ask to speak to a new employee. After he’s finished gushing about how wonderful the ILC loft renovation is as a working environment, we can return refreshed to what we do best, helping clients achieve their goals through design!

Professional Value, Fun with Math

Our lives intersect with professionals. They plan for us, design for us, operate on us, and give us their advice. Our communities are strongly influenced by their ideas:

of legality, of health, of our future.

The fundamental role of the professional is quite simple, although not easy.

To profess.

To affirm openly; declare or claim;

To teach, to claim knowledge of;

To enunciate through recommendations in a consistent and unbiased way certain principles and beliefs upon which we should act. It is a role of leadership within our community, and that is why accountants, architects, engineers, doctors, and lawyers, among other professions, must submit to extensive training and adhere to public standards in return for permission to offer services in these fields.

The meaning of “professional” moves about somewhat. Its contrast with “amateur” (as seen through the 5 lenses of the Olympic looking glass) has turned the professional into “someone paid for it” rather than one who works from purer motives. It is also viewed synonymously with “expert”. “Trust the professional!”

Without in any way denigrating the professional athlete, or any skilled tradesman, the professional has a distinct calling: one who advises action upon principles that she “professes”; and who takes a view of the issues from the public and client point of view, rather than a self-serving one.

Modern professionals occupy a wide variety of positions both publicly and privately, but many are organised into firms of private consultancies offering service for fee. It is here that livelihood and principles find a most uncomfortable intersection: “the billable hour”. Lawyers know full-well its tyranny, and clients its exasperation. The billable hour is rough justice indeed, and in some instances no justice at all.

Here’s the dilemma. Can a consultant truly be paid on the basis of the effect of recommendations, “the success of the project”, when the advice must be implemented by others in an unpredictable world? Whether acted upon or not, advice and ideas have value. This is in part the famous “$1 for showing you the spot to hit, $9,999 for knowing where it is” invoice.

But on the flipside, can a professional make a living by valuing only his or her time, each tenth or quarter of an hour generating a billing, regardless of the relation of that time to the service provided? The slower the service, the higher the bill?

How is a client’s best interest served if fees paid relate inversely to productivity?

To the latter 20th Century, many professions worked from agreed schedules of rates established for different kinds of service ($X as a reasonable fee for this task or that). This rubric of fee crumbled, however, in the face of concerns over monopoly and anti-trust legislation. Professionals turned increasingly to other yardsticks, and especially to formulae relating their remuneration to their time.

But as we often sense, there are problems with the time approach. While apprenticing many years ago at a large architectural firm, I discovered that team leaders knew very well that the firm’s senior partners must never be allowed to work on the project. Why not? Their billable rates would quickly ruin the time-based internal budget. Strange that the experience of the partners would lead to inefficiency, you say? Well, let’s take a look at the mechanics of the “billable hour”, the “hourly rate”, and how they are calculated.

Bear with me mathematically! How is an hourly rate usually calculated in the consulting world?

Working 37.5 hours a week gives 1950 potential hours of earning per year (regardless that professionals may work many more hours than that). A base salary of $75,000 plus a $50,000 overhead amount (for benefits, insurance, leadership, marketing, administration, office rent, technology, furnishings, supplies, training, and a further 20% on the subtotal for firm profit and insurance against unpaid bills) means that each hour must earn $64 to recoup the $125,000. Yes?

A mid-level professional earning that wage, working pretty much full time on billable projects for his firm, still spends some time away from that productivitiy. Perhaps 4% vacation, 3% sickness, 8% non-billable office duties and training, totaling 15% of her time. That means further that each “billable” hour (that is, an hour spent on work that will result in a productive bill to the client or project) must generate more revenue, to account for the non-billable (the 15%).

That brings us to $75.40 (64 divided by .85, ok?). From the client’s point of view so far, so good, because the bill a client receives is still linked to services that benefit his project (that is, it receives the attention of a trained, healthy and productive employee).

Now, here’s where things get interesting. In theory a rise in salary, a car allowance, other perks and items reward the more productive professional. Right? That is, the Jack earning $120,000 a year and costing $67,500 in overhead to the firm, should be accomplishing the same tasks as the aforementioned staff in less time. In fact, work that cost $125,000 from the junior should cost the same from the senior. Since the senior costs $187,500 a year, it follows that the $125,000 of work would get done in 2/3 of a year!

The client receives the same fee request for the same service. Well done. Where the greater project experience or project-smarts of senior staff identify solutions sooner, or craft better solutions, the system still works to the benefit of the client, even though the same hourly rate calculation for the senior fellow yields a billing rate of $113 per hour.

For some items that senior staff do, however, the higher productivity is so obviously not true that clients should be careful in their consulting contracts to specify that tasks best done by more junior employees should be charged at their junior rates. The senior partner likely uses the photocopier more slowly than her assistant, not more quickly.

Well we’ve done ok so far, and the money to value equation seems to be holding. Where might things start to stray?

Well, it’s that management thing. Where senior staff’s wages and overhead (the calculation of their worth to the firm) are more related to their management abilities and responsibilities, or their marketing connections, than their project-smarts, the billing rate calculation leaves reality behind.

So far, we’ve assumed that the senior professional is working on projects 85% of the time. But once in a management role, that same wage, overhead, and profit cost of the previous example ($187,500 per year) must be covered by perhaps only 50-60% of this professional’s working hours, since he is involved in many non-billable internal tasks (hiring the others, for instance). Additionally, his wage level is not related to productivity when he is working on the billable file, since his skills in the trenches may not outshine others earning less, through less use and less familiarity with the file. The client, however, is now paying $190 an hour for somewhere between $75 and $113 of productivity on the project (187,500 divided by 1950 divided by .5 for 50% billable hours).

That is why in the context of mega-consulting firms carrying large hierarchies, project managers often work to keep senior staff away from their projects and clients. They’re trying to get the job done efficiently, either on fixed budgets that can be side-swiped by the partners’ rates, or in an effort to avoid severely higher billings for the same services.

In a world of professional services where the work is often 10% inspiration and 90% perspiration, there is no doubt of the value of senior professionals at key points. Their judgement creates effective solutions for clients, saving hours and money. For these insights they are worth the high billable rate. When they involve themselves in the other 90% of the job, however, their rates do clients a grave disservice unless their productivity is 100% higher for tasks regularly performed by other staff, or unless the billing rates acknowledge the relationship between productivity and consultant billings.

Worse still, some firms have business models with billing for overhead and profit (including the cost of carrying a high-priced management hierarchy and rents in a toney part of town) at TWICE the cost of project wages, or even more. My examples above assume only once the cost (75k wage, 50k overhead, 25k to cover non-billable hours). At these higher levels of overhead, the junior professional bills about $115 an hour instead of $75. That’s a 50% higher bill for the same trained professional producing the same work!

And that more senior professional?

  • with larger responsibilities to the firm that aren’t related to your project, and
  • fewer billable hours to cover the firm’s $360,000 annual expectations?
  • producing an item of work that could efficiently be done by someone more junior?
  • $370 per hour.

At these rates one begins to wonder what priorities are being “professed”.

So next time you are presented with a proposal for time-based billing from a professional, ask him or her to break it down for you. Where does the money go? For productivity on your project? Or overhead? For trained staff to spend time efficiently creating solutions for you, or carpet in the boardroom?

Fool Me Once, Shame On Me: The Real Case for Quality

Some tidbits from our lives as architects, consultants, and designers.

The diagram above shows the inverse relation between changing your mind at the beginning of a project and changing your mind after you’ve built it. Just so you know!

That’s why thinking about what you’re going to do, and testing it, and investing in that thinking, makes a lot of sense. The farther down the road you go, the harder it is to make changes, and the more expensive it is to even make those small gains.

The  diagrams below illustrate a rough relation between your facility choices and your overall business or life cycle occupancy and project costs. Decide what to build. Build those decisions. Live with them for 20 years. What’s that like, in total cost terms? Analysis of that is called life cycle costing. It can get very complex, but hopefully these diagrams will illustrate why quality decisions and quality building are necessary if our built environment is going to get off the build-it-and-scrap-it treadmill.

Let’s assume the total cost of your facility, over its life span, is $1. Where does that buck go? We’ve prepared some diagrams to help. They’re based upon research into facility life cycle cost over 20 year periods, some studies coming out of California, and some elsewhere. Although the climate is different in California, the operating costs for our heat are replaced with their air conditioning, so the studies are somewhat applicable here in Southern Ontario too. And for the cogniscenti, no, they don’t include project wrap-up residual values!

The first diagram shows the relation we’ve accepted, whether as home or business owner, for every facility dollar: spend two pennies thinking (or often less, or nothing at all); spend a quarter building the decisions; and inherit 73 cents in operating and maintenance costs.

The next diagram shows what can happen if an additional 3 pennies are wisely spent on better thinking and better building (a further 1/2 cent more in the thinking, perhaps 2 1/2 cents more in building).

That 73¢ cost for operating and maintenance for most building types can drop by 10¢ or more. That saving pays for a third of the whole building project (and many times the additional investment in thinking and better construction), without even considering the higher value of the 20 year old asset that you own at the end (residual value).

But wait, buy now and get a free bonus offer!! Better buildings increase staff productivity through reduced absenteeism, staff turnover, job performance and satisfaction, estimated at about 7% across many building types both public and private.

Your bill for productivity (as salary and benefits) over that same 20 year period, the real reason you built the facility in the first place, is about nine times the facility dollar.

So that 7% productivity gain translates into a dollar in your jeans for every 10 dollars of salaries and benefits, courtesy of the careful and responsible project you constructed with the savings.

Oh, and what does your architect spend your thinking cent on? That’s the last diagram.

Think Better. Build Better. Enjoy Forever! It’s worth a cent!