RICH ARCHITECTS

Profit

2012-02-06T12:19:00.000-08:00

Passion must equal to profits. Unless you already have a ton of money, the passion we have for architecture as a business must equal the profit we received.

We need good, solid profit to run the business. Without profit, the business will suffer and quality of our work will decline.

Make Things.

2012-02-01T11:13:00.000-08:00

Architects need to make things, invest in development, buying properties, fixing up old buildings instead of just dealing with authorities on behalf of clients.

Optimization

2011-02-06T10:22:00.000-08:00

How much can we really optimize ? All sort of CAD software tell us we can optimize and become more efficient if we use their software. But in real life does it really happen ? How do we factor in all the additional cost and time on training and upgrading of software and hardware ?

Using some of these software is like driving a Lamborghini to do grocery shopping.
I think if your firm is happy and stable with a certain software platform you should just stick to it as long as you can. The unending cycle of upgrading is not optimization

Clients

2011-02-06T10:18:00.000-08:00

A bad client is a big waste of time and effort. They will undermine your credibility and waste your talents.
Check your client's background, interview them thoroughly before contracting to work with them.

Value

2011-01-22T21:07:00.000-08:00

Design service is very fragmented . It is hard for client to compare 'apple to apple".
Many a time, I lost potential clients because someone down the street can do a few dollars cheaper.
Typically client just focus on cost instead of value.
I think the best way to educate a client to see value is to list all the detail services we are going to provide.
For Example:
Instead of saying " Site Visit", we should expand it to :

Do I go alone or will I bring a survayor and civil engineer ?
How long are we going to spend at the site ?
Do I charge for any extra trips ?

Instead of saying " Preliminary Design", we should expand it to :

Do I provide freehand sketch or 3D CAD ?
Any cardboard/foam model ?
How many hours to be spend on concept design ?
What kind of software will be used ? ( show samples of cheap renderings VS high resolution renderings)
Are we providing any preliminary cost estimation ?

If we explain our service in details, I believe a reasonable client will see the additional value instead of additional cost. But again, trust your gut feeling about a client. Sometimes it is best to walk away from a project no matter how much the client wants to pay you.

Cash Flow- Invoices

2010-11-10T21:08:00.000-08:00

Cash flow is very critical to the financial health of any business. Make sure you collect payments from your clients promptly.

Your invoices to client should be simple and easy to understand.
Call them right after you send out the invoices to make sure they have received it.
You should start charging a late fee if you don't receieve the payment within 7 days, 2 weeks or 30 days after sending out the invoices. The amount of late fee should be stipulated on your original contract.
You should charge a fee for all returned checks.
All work should stop until clients are current with their payments.
Put a lien on your client's project if he/she still refuse to pay.

Consultant's fee Mark Up

2010-10-13T17:33:00.000-07:00

For any project, if you carry a consultant, you need to mark up at least 10% to 20% of the consultant's fee. There are administrative cost and risk to carry any consultants so make sure you get compensated.

If your clients require you to coodinate with their consultants. You need to charged them a flat or hourly fee to deal with them . Personaly I will charge by hour or a flat fee for not to exceed a certain # of meeting.

Everything

2010-08-08T08:54:00.000-07:00

Whenever your hear your clients say "EVERYTHING", right away you need to write down your "EVERYTHING" list and compare with theirs.

When your consultants or employee say "EVERYTHING" is done you need to do the same thing.

Anything that is not well defined should not be in the "EVERYTHING" list. Toss it out to avoid misunderstanding.

Anti Trust Laws

2010-08-06T19:01:00.000-07:00

Anti trust laws forbid architects to compare or discuss fees.

So the design fees are all over the spectrum. From patheticaly low to astronomical high.

99 % of the clients are walking around shopping for the cheapest architects.
Regardless of their skills, architecture services are reduced to commodity.
Clients have all the numbers and architects are in a fog, reducing or increasing fees on a whim without a clear understanding of profit and loss.

That is one reason architecture is not a profitable enterprise.

We don't know the real cost of doing business anymore.

The clients are holding all the cards.

http://info.aia.org/nwsltr_nacq.cfm?pagename=nacq_a_0708_pc_stephens

AS BUILT

2010-08-06T10:15:00.000-07:00

How much can you trust the information on any AS BUILT drawings or documents your clients handed to you for reference ? It could be 99 % or 0.9 % accurate. How about all the things that cannot be seen ? Things hiddened under the slab, ceiling or walls. Do you have a fee structure to deal with all those unknown issues ? Have you explained them to your clients ?

How much time do you need to verify without taking down wall , opening up floor slab or move 10 tons of boxes?

Ok the bottom line is you need to know how to charge and deal with all the unknowns before you start the project . You need to let your clients agreed to all these potential charges before you sign the contract with the clients. Or you should just walk away.

Good Deals-Discounts

2010-08-04T11:31:00.000-07:00

Can you really afford to give your client a discount ? Selling a service is not like selling a car or a chair where most of the costs of products are known. A service is almost open ended, unless you can specify very tighly in your contract/proposal. I think we should only give discount to a well defined scope. In order to get the discount the client needs to play a part like for example paying cash ahead of the project .

For Example:

Scope: Preliminary Planning Research for a restaurant

Senior architect: 6 hours @ $120 per hour
Junior Architect: 2 hours @ $80 per hour
Adminstration: 2 hours @$60 per hour.

Drafting: To be determined if required. Drafting @ $40 per hour
Printing to be billed at cost if paid within 7 days

Proposed Time : 10 hours
Total: $1000
10% discount if all are paid up front.

So if the client wants to save $100. Ask them to pay up front. If not , break down into 2 payments the most for a small scope like this one.

A discount is not free. It should be in exchange of something that is valuable to your firm.

Other People's Business

2010-08-01T09:52:00.000-07:00

Architecture practices in general are about other people's business. We wait for other people to call us when they need a new house, a new mall, or a new township. I think we should not rely on other people to sort out our business and future. We should be a builder/banker/ developer/architect all in one.

Negotiation with clients

2010-07-16T16:08:00.000-07:00

Average architects typically are not negotiating from position of strength.
If you have too much to lose, walk away from the negotiating table.
Don't agree to anything that seems good currently. Always think long term.
If you agree too fast ,too soon, you will look weak to the client. Don't be desperate.

Scope of works

2010-06-10T09:54:00.000-07:00

If the architect and the client are both very experience, the scope of works can be defined in detail without much explaining.
If the client is not very experience in the total scope and its various ramifications, the architect needs to take the time to explain to avoid misunderstandings.
If the architect has not enough experience, he/she needs to tell the client to look for another architect or bring in additional experienced consultants to help.

Wealth Guide

2010-05-30T11:13:00.000-07:00

Phil Ruffin ( not an architect of course) turned $20 million to $1.2 Billion.

http://videos.kansas.com/vmix_hosted_apps/p/media?id=13092850

Dennis Felix's Wealth Guide

http://www.timesonline.co.uk/tol/news/article1084093.ece?token=null&offset=36&page=4

Architect Vs Client

2010-05-27T09:27:00.000-07:00

What makes a project successful ? The architect’s ( + his/her consultant team) skill, judgement and experience is 50% of it . The other 50% is the client's project experience, intellect and budget.

Dr Garry's insights into the profession

2010-05-13T11:23:00.000-07:00

Interesting insights into the professoin and the training/conditioning of architects.

http://www.archsoc.com/kcas/Socialise.html

Bad Clients

2010-02-18T23:47:00.000-08:00

It took a few projects to teach me to stay away from bad clients.
So before signing up any project , I advise you to spend a few minutes, hours or days talking to your potential clients and get to know them .If you see the following signs you might want not to work with them.

These are the few bad signs:
1-Bargaining dollars and cents with you right from the beginning.
2-No experience in dealing with architects, contractors or building projects.
3-Unrealistic schedule.
4-Unrealistic budgets.
5-Very high expectation. Expecting perfection,but has no real budget to support it.
6-Cannot really define what they want or expect.
7-Mentally unstable, easily stressed out.
8-Check or call you every 30 minutes.
9-Rude.
10-Ask you for discount. Tell you there will be future projects.
11-Bad mouth about other architects.
12-Bad credit ( yes you need to check their credit histroy)
13-Expect you to guarantee the work.
14-Playing good cop and bad cop games with you.
15-Knows someone in City Hall who can expedite things.
16-Sleazy.
17-Don't trust your judgement

If you have any bad client stories , please share.

Architect As Developer

2010-02-11T11:29:00.000-08:00

I think the best way for architect to gain control over design, reponsibility and making profits is by a being a developer/builder. Without it all we ended up with is a set of documents which the clients wants to pay zero for it and their lawyers can find all kinds of issues with it.
There are many successful and rich architect/builders. The top 4 that came to mind over here at USA are :
John Portman (http://portmanusa.com/founder.html)
David Hovey http://www.optimaweb.com/Company/corporate_profile.html
Jonathan Segal. http://www.jonathansegalarchitect.com/
Isadore Sharp ( Canadian) http://www.fourseasons.com/book/

RICH ARCHITECT

2006-08-23T23:16:00.000-07:00

This blog is dedicating to all young and old architects who are starting or running their own business.
I hope we can all share our passion for design and also the day to day war and success stories
of running our business, dealing with red tapes and clients. From here I hope we can gain strength and confidence in dealing with all out there.
And I hope this will all make us Rich Architect, in experience and also in monetary term .