Architekwiki
  • WIKI
  • Start Here
  • Resources
    • Arch Fin Model
    • MyCorbu
    • Trello-PM
    • FeeCalqs
    • OFFPLAN
    • Reading List
    • Free Resources
    • All Resources
  • Other
    • Details
    • About
    • Sign Up
    • Terms of Use
  • MyCorbu APP
  • WIKI
  • Start Here
  • Resources
    • Arch Fin Model
    • MyCorbu
    • Trello-PM
    • FeeCalqs
    • OFFPLAN
    • Reading List
    • Free Resources
    • All Resources
  • Other
    • Details
    • About
    • Sign Up
    • Terms of Use
  • MyCorbu APP

Architekwiki

A Resource For Architects
Subscribe

Top 10 Ways Architects Lose Money

10/15/2015

1 Comment

 
Picture
Architecture is not known, at least to those involved, as the most profitable of businesses. Salaries aren't commensurate with responsibility. We all need to work on this. Here's my first shot.

#1  ’PLANNED’ LOSES
The number one way to lose money, or at least limit your profitability, is to inadvertently plan for that outcome. (See Architectural Economics.) Many firms ignore the facts of their own operation and use industry rules of thumb instead. Know your costs and ratios; and run your firm based on facts.


#2  FREE PRE-DESIGN
My experience is that clients do not do their homework when it comes to Pre-Design programming. When you start the project without the client’s program, budget and schedule; and, instead create these things as part of your services, you are doomed to go over-budget on design. Start getting paid for Pre-Design. Don't use your design fee to play a guessing game where no one knows the answer.

#3  UNREALISTIC CONTRACTS
Generally, unrealistic terms in a contract are annoying but harmless. However, an unrealistic scope of work for the stated fee is a good way to lose money. Percentage of Construction Cost Fees are especially likely to be inadequate during Schematic Design and Construction Administration. Keep records of time spent per project per phase, and quote fees based on these facts.

#4  NO PROCESS
You need standard procedures. If you don't have a well-thought-out process for designing a project, there are innumerable ways to overlook issues that will be much more time-consuming to resolve later. Develop checklists for everything you do.

#5  NOT PRUNING
It is really hard to fire people. There is nothing enjoyable or positive about it. But not doing what needs to be done can threaten the viability of the firm - and everyone’s jobs. Delaying the inevitable is an expenditure that affects performance and profitability. Learn to act early.

#6  DESIGN CREEP
When your client ignores the agreed upon scope of work for whatever reason, you are on the slippery slope of ’design creep’. Design creep invariably adds to your scope of work. When this happens, you must develop the habit of asking for additional compensation - a quick email asking for confirmation of the change gets the process started. For your part you also have to stick to the game plan.

#7  PROJECT MANAGEMENT-BY-CLIENT
Clients can get too involved with managing the project. Many clients get very involved in their projects. That is a good thing, usually leading to a better project. But when the client suggests/insists/requests work out of sequence, you have to say “No”. This is often difficult to deal with because the client is spending a lot of money; and “the customer is always right”. Nevertheless, unless you are being paid by the hour, the client doesn't have the right to meddle in your process.

#8  RISKY BUSINESS 
Working for developers and entrepreneurs that you don't know is risky business. Designing speculative work that doesn't pan out can mean not getting paid - no matter what the agreement says. Avoid developers' speculative projects and entrepreneurs who are shopping for a low fees with the promise of multiple projects.
 
#9  INTERMITTENT BUSINESS DEVELOPMENT
The easiest thing to do is to slow down or stop business development activities when you get busy. Because of the time it takes to find work, you are pretty much doomed to a downturn in revenues at some point in the future. The best way to get off this roller coaster is to develop a niche [link to 10/20/12 Publish to Build....], a specialty.

#10  EXCESSIVE EXPENSES
Lots of perks and benefits are seen by staff as a positive thing for your firm to do. However, giving is easier than taking away. Share profits through bonuses, and don't take on any expenses that aren't sustainable through slow times.
Orig post date: 1/14/2013

Picture

Get articles delivered to you by email, Sign Up here. 

Follow on Twitter @Architekwiki

###
1 Comment
Rick Wolnitzek link
10/16/2015 07:25:31 am

Sorry. I forgot to insert the link in No.1. Here it is
http://www.architekwiki.com/wiki/architectural-economics

Reply



Leave a Reply.

    Resources

    Start Here

    Picture

    Picture

    MyCorbu

    Trello-PM

    FeeCalqs

    Picture

    Terms of Use
    Your use of Architekwiki is implicit agreement with the 
    ​
    Terms of Use.

    RSS Feed


    Categories

    All
    Business Development
    Communications
    Concepts
    Design
    Detail
    Estimating
    Finances
    Legal Issues
    Management
    Miscellaneous
    Money
    MyCorbu
    People
    Planning
    Process
    Projects
    Records
    Services
    Specifications
    Standards
    Time
    Tools


    Archives

    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    June 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    October 2012

    Resources
VISIT ARCHITEKWIKI'S RESOURCES
Picture
Architekwiki | Architect's Resource | Greater Cincinnati | (859) 444-4560
© 2012-2020   Architekwiki​