Fees stuck in doldrums despite upturn in architects’ workloads
Practices are busier as more projects get off the ground, but industry figures believe it will take a year or more for fee levels to rise
Architects’ workloads are on the up – but fees have yet to follow suit, according to new data revealed this week.
The annual survey by the Fees Bureau, which is made up from data collected from architects in the UK, shows little rise in average fees from last year, even though research by the RIBA revealed there has been an 11 per cent increase in workload since October 2012.
The findings are confirmed by architects. Cartwright Pickard director James Pickard said: ‘Fees have not improved yet. We are still being undercut significantly by architects bidding for zero-profit or loss-making work.’
Andrew Mellor, a partner at PRP Architects, was more optimistic. He said: ‘Fees are certainly not falling any more. However, in our London office we are too busy and the external perception is that the market has turned, certainly in the housing sector. Fee levels are therefore certain to edge up.’
Aziz Mirza of the Fees Bureau also believed the picture was getting rosier. He said: ‘We are starting to see the end of the downward pressure on fees.
‘Although architects’ fees remain very competitive, we can see the start of an uplift in some of the key sectors, such as small residential and office jobs, where we’ve seen workloads increase recently.’
The views are reflected in the most recent RIBA Future Trends for October, which reveal that architects’ work levels have shown the first year-on-year increase since 2009.
RIBA director of practice Adrian Dobson said: ‘All indications strongly suggest that this extremely challenging and lengthy recession in the market for architectural services is finally coming to an end.
‘The overall balance of reporting suggests steadily growing confidence, with many practices reporting a notable increase in enquiries and dormant projects springing back into life.
‘However, in terms of fees, our best estimate is that it will take a year – or perhaps even longer – of solid growth before we see salaries for employed architects and fee levels beginning to rise to any meaningful degree, because there is still significant spare capacity to be called upon.’
While workloads remain about one third below the peak level of early 2008, new forecasts from industry-tracker Glenigan predict a welcome 4 per cent increase in project starts for 2014.
Allan Wilén, economics director at Glenigan, said: ‘We anticipate an acceleration in construction growth [and] the private sector will be the key driver of demand in 2014.
‘We expect strong growth in the value of industrial, office, retail and hotel projects being brought to site.’
Wilén added: ‘New project starts in these sectors contracted during the first half 2013 as economic confidence faltered. But data for the second half of the year shows a rapid growth in starts, which is expected to continue through next year.’
According to Glenigan, the underlying value of project starts in the UK has risen by 2.5 per cent from 2012, due to increases in the value of civil engineering projects and an uplift in private housing.
Nigel Ostime, Whiteroom Architecture
I think going forward we will continue to see pressure on fees and the successful practices will be the ones that can demonstrate value, whilst keeping their overheads low but continue delivering high quality architecture.
It would be dangerous to draw too many conclusions from one practice’s experience with fees, particularly one in its first year of trading! However, the overall situation does appear to be improving. I generally set out my fee proposals in some detail, explaining what the costs are to illustrate where the value lies. That means that if cost/expenses can be kept low then an appropriate profit margin can be achieved.
Matthew Goer, director, Associated Architects
We’re still finding fee levels remaining competitive, we’re not seeing any signs of increases.
John Assael, Assael Architects
We are still under pressure from clients to put in low fees. However, we simply refuse to work on projects where the proposed fees are so low that we can’t deliver a professional service and I wish that more architects would do the same.
Tom Hart, director, RG+P Architects
Fees are remaining the same but the workload is increasing substantially in certain sectors such as residential. I am looking at increasing my fees as there appears to be more reliance on the services of an Architect in the fullest sense rather than just being part of a team.
Mushtaq Saleri, director, Studio Three
We have found that enquiries are definitely on the rise, but there is still hesitancy in the market - it’s taking a lot longer to go from initial enquiry to appointment. We think we offer good value for what we deliver (which is recognised by experienced and responsible clients) but there are more and more firms willing to carry out work for next to nothing just to get their feet under the door. I don’t think in a competitive market we can ever eliminate suicidal fee bidding, but with a better approach to procurement (especially in the public sector), a resistance by good firms (perhaps as part of the Chartered Practice Guidelines) to low fees and a greater understanding of the value architects bring to any project we should see a steady improvement.
Rab Bennetts, director, Bennetts Associates
We have lost count of the times we have been beaten on fees during the recession but this reflects our refusal to go in below fee levels that we feel are right. It’s possible that the lowest bids are creeping up but I don’t have any evidence of this. Recent feedback on bids suggests otherwise. Our own fees are unchanged.
The big issue coming up is construction inflation, as contractors and some consultants who have bid very low may go bust as prices and wage rates rise. The recent spike in residential property demand as a result of Government intervention has sparked some serious inflationary pressures in the industry as a whole, after years of constraint.