Principal's Report
Principal’s Report is a monthly newsletter for the owners of professional design firms. The editorial focus is on profitability and leadership. Regularly covered in the newsletter are such topics as partner compensation, leadership training, construction forecasts, fee levels, contract negotiation, and retirements plans. Timely surveys uncover useful information and insights by A/E firm principals.
June 2008 - Table of Contents
When the CEO of a midsize A/E firm recently reviewed yet another in a long series of disappointing financial metrics, he complained to the principals, “You agreed to do what is necessary to meet your goals, and I can’t understand why you didn’t!” Each of the principals—competent professionals all—had a new “story” to explain their failure, pointing once again to factors allegedly beyond their control or isolated projects or incidents.
Billings and earnings are down, and except for institutional projects like schools and health care facilities, they are likely to remain down for the rest of the year. So while it isn’t too late to take steps, it is high time to make certain decisions and look at the downturn as an opportunity to run a tighter ship and prepare for expansion once the recovery kicks in.
More and more, your firm’s Web site is your front door to those you try to impress most—client prospects, present clients, and prospective job candidates. It has developed into a prime generator of leads. How easy it is to download, the clarity of its navigation, the length, clarity, and arrangement of its text, the format and content of its contact form—all have a powerful impact on those target audiences.
After an ominous dip in January and a nine-point dip in February, the March Architecture Billings Index dropped to its lowest level ever, according to American Institute of Architects chief economist Kermit Baker, who each month computes this leading indicator of construction activity.
Like the swallows at Capistrano, spring marks the arrival also of Engineering News-Record’s much anticipated annual listing of the Top 500 Design Firms, as everyone watches to see who gained a notch in ranking or slipped a couple.
PR supplements its story on tackling the economic downturn (“Learning to Thrive in a Downturn”) with the summary below of key pointers offered on a podcast by two architects and the American Institute of Architects’ chief economist.
Salary compression has grown way beyond the confines of human resources’ standard operating procedure to become a major factor in recruitment, retention, and staff morale. It’s defined simply as the phenomenon of offering desirable incoming A/E staff or high-performing incumbents a compensation package that exceeds that of long-time staff working at the same level.
Future profits on a job are often lost at the negotiating table. Here are eight concerns you or your negotiator need to keep in the forefront as you sit down to close a deal:
The three principals are Mark Strauss, principal of FXFowle, Magnus Magnusson, managing principal of Magnusson Architecture and Planning, and Thomas Friedstein, managing principal of recently merged RMJM Hillier. They spoke on a recent panel sponsored by the Professional Practices Committee of the New York AIA chapter.
Principals with the vision to support integrated design practice should note the recent decision by UK-based architect RMJM to award $1.5 million to the Harvard Graduate School of Design to establish a program for the research and education of integrated design practice.
Thanks to a March vote by the American Institute of Architects board of directors, sustainability will become a formal learning requirement for architects intent on meeting their annual learning requirement quota of 18 hours, of which eight continue to be on health, safety, and welfare (HSW) topics.
Qualifications-based selection appears to have won over price-based architect-engineer selection in most states and has been federal government policy for a generation. Also known as the Brooks Law after the late Texas congressman, Jack Brooks, who spearheaded the legislation, the law does away with A/E selection based on price.
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