‘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.