May’s RIBA survey on anticipated workload shows private housing remains the strongest sector, while the prospect of commercial work is increasing. Adrian Dobson explains the figures
The RIBA Future Trends Workload Index was virtually unchanged in May 2015, nudging up to +37 compared with +36 in April. To remind you, participants give monthly predictions for overall workload and staffing levels over the next three months, and are also asked about their workload predictions in key sectors. The balance figure is the difference between those expecting more work and those expecting less.
The outlook remains positive throughout the UK, with all nations and regions returning positive balance figures. Leading the pack were practices in the north of England (balance figure +50), Wales and the West (+44) and London (+40), showing that the growth in demand for architectural services is now widespread. In terms of practice size, small practices (1-10 staff) with a balance figure of +35 remain very positive about the outlook for future workloads. Large practices (51-plus staff) are also upbeat about work prospects with a balance figure of +33. Medium-sized practices (11-50 staff) with a balance figure of +54 continue to be the most optimistic about future growth.
The private housing sector workload forecast fell back a little this month, dropping to +34 in May from +38 in April, with sentiment affected by a downturn in private house-building activity ahead of the recent general election, but the sector remains the best performing in our forecasts. Our commercial sector workload forecast increased to +21 in May, up from +15 in April, and practices continue to expect the commercial sector to perform well during 2015, led by the office and leisure markets. The public sector workload forecast decreased this month, down to -1 in May from +3 in April, moving into negative territory for the first time since July 2014. Our practices are forecasting that public sector capital spending on building will be flat at best over the coming quarter. More positively, the community sector forecast recovered from its recent decline, up to +4 in May from -3 in April.
The RIBA Future Trends Staffing Index dipped slightly this month, standing at +16 in May, down from +18 in April. Our employment index has been in very positive territory for some time and there is every indication that the employment market for salaried architects will remain strong over the coming quarter. Just 2 per cent of our participating practices anticipate that they will be employing fewer permanent staff in three months’ time. Medium-sized practices, with a balance figure of +55, remain the most confident that they will be increasing their staffing levels during the next quarter. For large practices, the balance figure in May is a very healthy +50. Small practices remain more cautious with a balance figure of +8. Almost a fifth (17 per cent) of our practices reported that they expected to increase their temporary staff numbers during the next quarter. Overall the balance in the employment market has now shifted, with architects with the right balance of skills in high demand.
Only 12 per cent of our respondents reported that they had personally been under-employed in the last month, confirming our view that much of the spare capacity that was maintained within the architecture profession during the recession is now being productively deployed, and pointing to further increases in future staffing levels. Our practices are currently employing 5 per cent more students (year-out or post-Part 2) than they were in the equivalent period 12 months ago, so the outlook for students seeking professional experience is much improved.
Clients are resistant to increases in fee levels
Anecdotal commentary received indicates a growing market and increased turnover. However, we continue to receive reports that clients are resistant to increases in fee levels and that profit margins on many projects are still tight. Nevertheless, as the employment market for architects becomes more competitive, we anticipate that increases in salary expectations, along with more general economic growth and the return of modest inflation, will begin to bring some upward momentum to fee levels.
The overall picture seems very healthy, with established medium-sized practices feeling the most optimistic. An increase in productivity and profitability would be the next step to seeing a profession back running at peak performance.
Adrian Dobson is director of practice at the RIBA and the author of 21 Things You Won’t Learn in Architecture School