FEE bargaining within the architecture industry is seriously affecting the future viability of architectural firms, according to Oldfield Knott Architects managing director Ian Oldfield.
FEE bargaining within the architecture industry is seriously affecting the future viability of architectural firms, according to Oldfield Knott Architects managing director Ian Oldfield.
Mr Oldfield told WA Business News the system of job tendering, which is becoming increasingly prevalent, has led to many architectural firms quoting prices that barely cover the cost of wages.
The tendering system used predominantly by the State Government is not judged strictly on the criteria of cost. Architects must meet a range of criteria and cost might only equate to 20 per cent of that, Mr Oldfield said.
But if all of the firms tendering for a job meet the criteria equally, and are capable to carry out the project, at the end of the day it comes down to the fee, he said.
“The tendering system, which is almost becoming endemic, has pushed the normal architectural fee for a normal job down to nearly half of what you would have got 15 to 20 years ago,” Mr Oldfield said.
Architects traditionally expect a standard fee of about 6 per cent of the total budget for a job, he said, based on a formula that allocated a third for fees and wages, a third for overheads and a third for profit. But architects were now tendering for work at 3 per cent of the budget, which left no margin for profit.
“It’s ridiculous. Those jobs should be at least 5 per cent, we are in the business to make money,” Mr Oldfield said.
“If you really cut the guts out of your fees, it might just push you over the line.”
He said that, as a result of the reduced fees architects were earning, architectural firms could not offer their architects suitable remuneration.
Spowers Architects managing director Peter Lee said the level of fees that some people were working for indicated a failure to understand the true cost of the provision of services. Either that, or there was a lowering in the quality of service provided, or volume of work available.
“The industry has seen more rationalisation in the last 10 years than at any time in its history,” Mr Lee said.
This is likely to continue and will likely result in a few major firms with broad skills bases dominating the market, Mr Lee said, with specialised practices targeting specific individual market segments also doing well.
This will result in the smaller one- and two-man operations being able to undercut the bigger players in the market. It also may become increasingly difficult to attract people to study architecture and enter the industry, Mr Oldfield said.
Mr Oldfield told WA Business News the system of job tendering, which is becoming increasingly prevalent, has led to many architectural firms quoting prices that barely cover the cost of wages.
The tendering system used predominantly by the State Government is not judged strictly on the criteria of cost. Architects must meet a range of criteria and cost might only equate to 20 per cent of that, Mr Oldfield said.
But if all of the firms tendering for a job meet the criteria equally, and are capable to carry out the project, at the end of the day it comes down to the fee, he said.
“The tendering system, which is almost becoming endemic, has pushed the normal architectural fee for a normal job down to nearly half of what you would have got 15 to 20 years ago,” Mr Oldfield said.
Architects traditionally expect a standard fee of about 6 per cent of the total budget for a job, he said, based on a formula that allocated a third for fees and wages, a third for overheads and a third for profit. But architects were now tendering for work at 3 per cent of the budget, which left no margin for profit.
“It’s ridiculous. Those jobs should be at least 5 per cent, we are in the business to make money,” Mr Oldfield said.
“If you really cut the guts out of your fees, it might just push you over the line.”
He said that, as a result of the reduced fees architects were earning, architectural firms could not offer their architects suitable remuneration.
Spowers Architects managing director Peter Lee said the level of fees that some people were working for indicated a failure to understand the true cost of the provision of services. Either that, or there was a lowering in the quality of service provided, or volume of work available.
“The industry has seen more rationalisation in the last 10 years than at any time in its history,” Mr Lee said.
This is likely to continue and will likely result in a few major firms with broad skills bases dominating the market, Mr Lee said, with specialised practices targeting specific individual market segments also doing well.
This will result in the smaller one- and two-man operations being able to undercut the bigger players in the market. It also may become increasingly difficult to attract people to study architecture and enter the industry, Mr Oldfield said.
