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THE SIZE OF THE MATTER

AGENDA

Back in 2002, Paul Hyett gave a speech, as RIBA president, to the institute's annual conference. In it he warned, to catcalls of derision, that the profession was facing a revolution that would see many of its small and medium-sized practices swallowed up by vast national firms.

Following a fairly hefty bout of controversy, the debate unsurprisingly died away. Noone thought a great deal more about it; life in the architectural community continued much as it had done before.

But look around now, three-and-a-half years later, and what is happening in the world of architecture? The big firms are getting bigger and, whereas historically they would grow organically, increasingly they are buying in staff and buying in practices.

This aggressive business strategy seems to be manifesting itself in two major practices.

The first, and most obvious, is SMC Group. Rarely has a firm with such a commercial mindset been seen in the architectural sphere. Barely embryonic five years ago, the practice now has a staff of 300 including 140 architects.

This has been achieved almost exclusively through acquisition.

Last week, the listed company took over two more firms - Ian Penrose Architects and Covell Matthews Architects - at a cost of £4 million.

In addition, rumours grow that Capita is now planning to take over two more practices in the next couple of months, following its purchase of Percy Thomas in 2004 and of Norman and Dawbarn in 2005.

More and more, it seems as though acquisition is a trend that is not about to go away.

There is a strong argument, as Hyett predicted in 2002, that this is the natural conclusion to a process that started in the '80s, with the break-up of local authority architecture departments. When these huge groups went their separate ways, they spawned a vast number of small practices. Hyett, now chairman of the massive international firm Ryder HKS, argues that this breakdown of employment is unsustainable.

Especially with the relatively new imposition of the PFI and partnering procurement methods, clients on major projects are less and less interested in taking on small, largely untested offices to carry out major schemes.

It was only a matter of time before architectural offices started to grow through mergers and takeovers.

'I was right when I made my speech, ' Hyett says. 'There is certainly an irresistible trend out there.

'As a profession, we are belatedly beginning to catch up with others such as lawyers and accountants. This is certainly happening.' Both SMC and Capita appear to believe that they are in this vanguard, and not, as has historically been the case, embarrassed by their commercial pragmatism.

'There is certainly a theme developing out there, ' Robert Firth, head of architecture at Capita Percy Thomas, told the AJ. 'I am sure that the extremely specialised offices and the headline architects will be fi ne - there will always be a market for them.

'But the small-to-medium and medium-to-large companies are already suffering.

Our way of doing business is to wait for good practices to come to us when they get into difficulties, and then we discuss taking them on.

'But the fact is that we are turning down many more than we are taking on at the moment.' If this statement is accurate, then it tells a worrying tale about the state of the profession.

Certainly SMC Group's way of doing business is more aggressively commercial than Capita's, but much about their story provides an indication of what is happening in the architectural market.

'There is no question about it, ' founder and chief executive Stewart McColl says. 'The market is far too fragmented - there are way too many small businesses.' For McColl, there are some simple corporate rules that drive the revolution. 'No company should allow themselves to have more than 20 per cent to 25 per cent of its business from one client, and no client should allow themselves to provide any more than the same level of business to one company, ' he says.

'Businesses should not be so interdependent.' SMC is clearly following its words with actions. 'We are looking at some more major companies to take over soon, ' says McColl.

'I can see a situation where there are less than a dozen major practices out there doing the large work in the future.'

McColl is realistic about how long this evolution will take. 'It will take at least another 10 to 15 years to reach maturity. Just look at how long it's taken legal and financial companies to modernise.' All this is presumably music to Hyett's ears. He also has a clarion call for young architects.

'The current situation is odd. If you were to transpose it to engineering you will see what I mean, ' he says with zeal.

'The best young engineers want to join the very best firms like Buro Happold, Arup or Whitby Bird. They do not want to try and take them on from their kitchen tables.' This may not seem a romantic notion, and it isn't.

But the power of the argument is undoubtedly there. Could Hyett's revolution already be under way?

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