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Survey

Tough decisions: AJ survey reveals further cuts as Coronavirus lockdown extended

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The AJ’s second coronavirus survey shows the abrupt fall-off in work is biting hard. One in 10 of the anonymous respondents thinks their practice might not survive. Richard Waite reports 

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‘Around half of our projected turnover for the next six months has simply disappeared,’ said one of the almost 700 respondents to the AJ’s latest coronavirus survey. ‘Even projects that were at design stage, which we thought were safe and where design work could continue unaffected, have been delayed.’

The results of the online questionnaire paint a bleak picture of how the lockdown has decimated architects’ workloads and, in turn, impacted pay, hours and staff numbers.

The AJ’s data echoes the findings from the RIBA’s monthly Future Trends Survey, which recorded the steepest fall in architects’ confidence since it began in early 2009 following the global economic downturn. 

Speaking about the collapse in confidence, Adrian Dobson, executive director of professional services at the RIBA, said: ‘While concerns about the potential impacts of the coronavirus crisis had been building for many weeks, [last month] was an obvious turning point. Many practices reported a sudden loss of revenue as the UK went into lockdown, construction sites began to close, and new enquiries dropped off.’

While the business landscape continues to shift and architects are finding innovative ways to adapt to the ‘new norm’, there are fears some firms may not outlive the crisis. Nearly a 10th of respondents thought their practices wouldn’t survive.

 

Plummeting workloads

‘All the projects on site or gearing up to start on site have been put on hold. At earlier stages some have paused, while others have been brought forward as some clients look to think about what work they can usefully do in this period, lining up projects for when things get back to normal. We’ve even had a number of new instructions for concept stage and planning stage work in the past three weeks, which has offset any paused projects.’

The AJ’s latest survey shows that the number of projects reported to have been put on hold has more than doubled in the past three weeks.

In March, only a third of respondents (33 per cent) said that schemes were on ice as a result of the pandemic. That figure has now risen to 69 per cent, with a further 7 per cent saying they had seen projects completely cancelled.

One respondent said: ‘All our retail, and commercial work has been put on hold. Although in some cases this would be the perfect time to carry out the work, most clients feel they should not be seen to be spending money.

‘Most of our projects are in the arts sector which has been very badly hit. All Arts Council Capital grants for the next year and the foreseeable future have been diverted to help support existing organisations struggling to survive. This means finding money for new projects yet to have funding confirmed is almost an impossibility. We’ve had several projects cancelled altogether on that basis. Projects with funding already committed from the Arts Council are so far going ahead but with significant value engineering. One of our building sites has closed. Another remains open as the contractor wants to continue to protect livelihoods. It is very difficult to stop work on a listed building with only half a roof on.’

‘[On top of this] most of our private housing work is unable to proceed due to lack of access to site, either for surveys or construction work.’

The AJ’s data backs up research from the RIBA, which shows those working in the private housing sector are the most affected by the Covid-19 lockdown. Our survey confirms that three quarters of architects, architectural assistants and technologists working on private residential schemes have seen projects temporarily shelved. 

Meanwhile, estate agent Knight Frank has estimated a loss of £7.9 billion in renovation and DIY spend by homeowners in 2020.

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Reduced hours and pay

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In response to a dwindling order book, practices are, understandably, having to make cutbacks. 

‘Before the lockdown I was getting several enquiries a week, but now I am not getting any,’ said one survey respondent. ‘Hence: less work and fewer hours.’

‘Initially we all took a 20 per cent pay and hours cut but, as we have had some staff go on furlough, the rest of us are now back on full hours and pay.’

In fact 20 per cent of all those who answered the questionnaire said their hours had been reduced. 

‘Our hours have been reduced to 80 per cent and we have been asked to take a minimum of five days’ holiday within the next three months.’

‘As a director, I take my pay as a dividend from company profits. Due to the stopping of all our work, we will not make any profit this year; therefore I will not get any pay.’

Even more have seen their salaries cut. Nearly a third said their pay packets had been trimmed and a further fifth of those answering said it was under discussion.

One respondent said: ‘Everyone in the office has taken a 20 per cent pay cut indefinitely. We have been advised this could last six months.’

The figures show that women were more likely to be affected than men – 35 per cent of female architects said they had taken a cut, compared with 29 per cent of men.

 

Furloughs and redundancies

All of the practices in the AJ100 top 10 have told the AJ they have put some of their staff on furlough. 

Earlier this month the RIBA also confirmed it was furloughing 30 per cent of its near-300 UK workforce and relying on the government’s Coronavirus Job Retention Scheme to ‘safeguard jobs and ensure a level of financial security for the institute’. 

‘As a practice we had to reduce from four to two staff members due to Brexit. We are now reducing to three days a week due to reduced workflow. It had been picking up in January, too…’

Indeed, nearly three-quarters of survey respondents said their practice would be making use of the Job Retention Scheme, under which the HMRC pays 80 per cent of employees’ salaryies up to £2,500 per month to cover those who otherwise would have been laid off during the crisis. 

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One respondent said: ‘About 20 per cent of staff have been placed on furlough, with more likely to follow as further projects fall away and turnover is reduced due to Covid-19 fallout.’

‘It has been mainly the administration staff who have been furloughed, particularly document control, which is placing a lot of pressure on the remaining teams.’

Another said: ‘All but two members of staff are now on furlough.’

Yet the number of practices making or planning to make redundancies remains low, perhaps because of the government aid packages, including the VAT and Income Tax Deferral Scheme.

Only 2 per cent of respondents said their practice had laid people off and just 10 per cent said it was being considered.   

‘We are trying to avoid redundancies,’ said one respondent. ‘But we have one staff member who has just started and is not eligible for furlough. 

‘I do not intend to put staff on furlough. None of us want it, so we are exploring other options to try to make us stronger at the other end of this – it’s time to invest in us.’

‘We don’t know how long we can prioritise them over longer-serving staff members.’

Depending on how long the lockdown continues, there could be more tough decisions for practice chiefs ahead. 

 

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