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‘Suicidal bids’ could lead architects to bankruptcy

Architects are ‘cutting each other’s throats’ and making ‘suicidal bids’ in the scramble to find work, according to the directors of some of Britain’s largest practices

The AJ spoke to five directors at AJ100-listed practices and three bosses of RIBA Award-winning firms, all of whom spoke of a severe and worsening situation.

Fears of a double-dip recession are blamed for forcing fees down by as much as 30 per cent, fuelling a surge in practices undercutting each other to win work.

This follows reports that the victorious architect in a contest for a London housing scheme made a ‘suicide bid’ equivalent to just 30 per cent of another studio’s failed fee submission.

According to the head of a firm ranked highly in the AJ100 list of Britain’s biggest practices (AJ 20.05.10), fees on education projects are as low as 2.5 per cent.

The boss of a 2010 RIBA Award-winning practice added: ‘We have had to put in extremely competitive fee bids lately and our quantity surveyor advises us that the going rates are 20-30 per cent lower than in 2008.’

Practices bidding at ‘unsustainably low’ fee levels are flirting with financial and professional disaster, according to another director. ‘If insurers see a ridiculously low fee, they’ll ring alarm bells and ask the client how they expect to see the project through on such a fee,’ said Amin Taha of Amin Taha Architects.

Since the RIBA abolished fee scales in 1982, it’s been impossible to prohibit undercutting. One architect claimed the RIBA had pulled out of any discussion about fees and fees advice, but RIBA president Ruth Reed said: ‘[We are] constantly making the case for the value of good design and its relative remuneration.’ (See comment, below)

Robert Adam, director of Adam Architecture, said: ‘If you’re stupid enough to sell your time at a loss, don’t expect anyone to be sorry when you’re bankrupt.’

 

Ruth Reed explains the RIBA’s stance on fees

Office of Fair Trading rules prohibit the RIBA from protecting fee levels. However, even when the recommended fee scale existed in the past, it didn’t stop some practices from offering ‘below-rate’ fees.

The RIBA cannot exert control over the individual commercial decisions that lead to very low bids, but it does seek to influence them by providing information on the problems caused by unrealistic fee reduction, talking to client authorities about the need for properly costed design expertise, and constantly making the case for the value of good design and its relative remuneration.

The RIBA also publishes extensive guidance on resource-based fee negotiation and management in the RIBA Good Practice Guide to Fee Management. The practice of making unsustainable fee bids is, naturally, very frustrating for architects who wish to retain workable fee levels, especially when they remember how long it took to recover sustainable levels after the last recession.

 

Readers' comments (10)

  • John Kellett

    Is it possible to use the various requirements of the 'Professional Codes' of the ARB and RIBA to reprimand or expel members/practices for working at fees levels that cannot allow them to provide a professional service? It could clearly be seen as a measure to protect the 'consumer' of our services.

    At the moment I am submitting fee quotes that allow me to do the work properly, with not much success. If I bid at a lower level which prevents me carrying out the work professionally I will be bankrupt very quickly. It is frustrating that the RIBA seems to be invisible to the general public in promoting the creation of architecture by architects.
    A requirement in law that buildings are designed by persons qualified so to do would help! Chartered Technologists and Chartered Surveyors are of course at least partially qualified to design buildings and many do a fine job. However, lot of the architect's traditional clients are using unqualified and untrained persons and businesses for even quite large buildings which is denying the profession of a substantial amount of work.

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  • 'Chartered Technologists and Chartered Surveyors are of course at least partially qualified to design buildings and many do a fine job'

    Chartered Technologists are fully qualified to design buildings.

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  • Name one single building by any "Chartered Technologist" (whatever that is ) or indeed Chartered Surveyor that is worth a damn as architecture?

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  • I think your comment above is incredibly blinkered. On the CIAT website there is a section that outlines the technologist's role, heres the link.

    http://www.ciat.org.uk/en/careers/What_does_a_Chartered_Architectural_Technologist_do.cfm

    Alternatively, take your comment and replace 'any chartered technologist (whatever that is) or indeed chartered surveyor' with 'yourself' and I'm sure you'd have little reason to be so gracious.

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  • Look, it's a simple enough task, one building, anywhere.

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  • simple answer. Look at all the architectrural practice and count how many qualified architect they employed. See what's their role in constructing the building they design. No joke......they depend heavly on the Arch.Tech to get it work or even drawing it up.

    Which is why.....in the industry many have loss confident with architects integrity. Preety picture is no value to contractor.

    on the other hand, we have too many professional bodies but do nothing but giving piece of silverware once a year. Should they control the fee and their members.
    [this issues have been debated many times]

    As long the title 'architect' is protected title with thier funtion and no building work should be carried whitout Qualified person's signiture than Architectural bussiness remains as cut-trout bussiness. And we all will be working for cheap wages.

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  • Non, thought so. Get a spel chik

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  • Who is it that issues the practical completion certificate?
    ... the architect.
    All finished?.. okay then..
    Back to the subject.
    The practice I recently worked for (yes, there is a message here) undercut itself with unrealistic fee proposals and did 'win' the job.
    4 months in to the contract the client asked for the initial fee to be readdressed, due to budget cuts and reshuffling of departments, looking for a reduction target of 30-40%.
    As this contract was one of the only jobs keeping us afloat we had no choice but to reduce the current services and issue the revised fee proposal at the middle ground of 35%.. If we remembered to turn off the office lights before we left.
    The new fee proposal ran for 2 months and was then put on hold.
    We were in the situation of proposing a low fee to win work and then reduced the fee even lower to keep it.
    The lights in the office are off for good now.

    The profession is a shambles.. and we are to blame.

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  • Not only are architects putting in suicidal fee bids, but the glamour parade we need to do to win the job involves ever more detailed proposals - pitches can now include detailed plans, elevations, models and visualisations. These come at great expense and even if we do win the low fee is unlikely to compensate for all our efforts. Clients interviewing for an architect can expect to get 5 designs for free - they can pick the best design and the lowest fee - and it is often public sector clients that exploit this the most. In the desperate clamor to win jobs we have been forced into giving away our most valuable assets for free. The profession will not survive and the RIBA are doing too little too late. Will the last architect please turn the lights off on the way out.

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  • John Kellett

    I seem to have stirred up a bit of a hornets nest.

    The training of a Chartered Technologist or Chartered Surveyor is shorter than that of an architect. Design, aesthetic or otherwise, is a smaller part of the curriculum. Therefore both are less qualified than architects to design buildings. Simples. It is the unqualified designers, surveyors, technicians and architectural consultants that are the major concern. The client has very little protection from them and it is the unqualified who are undercutting our fees, and offering a poor service, for even quite large buildings now. Our profession still suffers through association. How often do you hear that an architect has done a bad job, only to discover that the business or person concerned was not qualified or registered. The RIBA, ARB and government need to be informing the general public better. Only then can we hope to be able to offer clients a cost effective service and make a sensible profit, just like every other business.

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