Architecture – the State of the Profession

Earlier this week the South African Institute of Architects released the findings of its survey into the state of the profession to members. The findings do not make encouraging reading:

  • Extrapolating the number and value of projects from the survey it is estimated that SAIA Practices handle 11,570 projects with a total value of R12.7 Billion in fees. 41% are private individual projects but they make up only 19% of value.
  • 49% of Practices consist of between 1 and 3 people. They earn 11% of the total fees.
  • The median turnover for 1-person practices is R 471,000 p.a. The average is R 785,000 p.a.
  • The average profit margin is 12% and 1 in 5 practices reported a loss. A similar recent survey in the UK showed an average profit margin of 17% – over 40% higher.
  • The low turnover and low margins explains somewhat the low investment in IT and training – average totals of 6% and 2% of total turnover respectively.
  • 69% of Practices undertook work at risk and of that, 55% of projects worked on at risk led to fee earning work.
  • The average fee percentages agreed with Clients are well below even the 2011 SACAP Guideline Fee Scales
  • The last two points explain to a large extent the low profit margins and the low investment in training and IT.
  • Transformation is slow with 61% of all staff being white and 84% of all Principals, Partners and Directors being white. Regarding women, the percentages are 41% and 21% respectively. But with salaries being as low as they are, and study times being as long as they are, this is not an attractive profession. You gotta love it to do it!

Having said that, there are a number of key areas where architect could improve in order to make themselves better businesses:

  • Only 35% reported having a business plan and only 63% reported having a cashflow forecast. How do companies run without at least a cashflow forecast?
  • Only 46% of Practices track project costs, although most of the larger practices do. While 62% of Practices say they use Timesheets, only 21% say they review them regularly. How does one know whether the fees one is charging are adequate if tracking is not taking place.
  • Only 17% of Practices have some form of Quality Management system – and that is due to the much higher percentage of large and macro practices reporting having one. This does not have to be complex. Developing a series of checklists for critical activities will help enormously in cutting down errors and omissions.
  • Only 36% have a skills development plan, the majority again made up of large and macro practices. While it is a requirement when over a certain size, it is worth doing this properly – identifying shortfalls in the knowledge base of one’s practice and having a plan to remedy that.

These are only some brief PERSONAL preliminary thoughts. I have presented these and other findings at workshops in Cape Town and Gauteng, and will be doing so next week in Bloemfontein. On the SAIA website, as part of the members portal, there is a place for comment. I would love to hear your thoughts.