One of my favorite comedies is the film Groundhog Day, in which Bill Murray’s character wakes up on the same day over and over and over again, stuck in a cycle that not even death can break. That is, until he gets things right. In the design and construction industry, a lot of us feel like we’ve been living the movie for the past four or five years. In honor of Groundhog Day, the holiday, here’s some prognostications for the architecture, engineering, and construction (AEC) industry. I’ll be blogging more about this topic in the coming weeks.
Whenever you discuss trends, you are combining facts with predictions. Some of what I’m about to share are personal observations, some are predictions I’ve read or heard from others, and most are a combination of both. Here’s the first two observations, with more to follow:
Commoditization – This is the dreaded word in the AEC industry: being treated like wheat. No matter what we do, it always seems like there is a firm willing to do it cheaper – often predisposed to lose money in the process just to have some work, and frequently putting out an inferior product. Clients beat down designers and builders to cut costs, but they do so because they are getting beat down by their boards of directors and competitors. It is a viscous cycle. On top of the fee challenges, AEC firm brochures and websites are largely indistinguishable from one another, as if we’ve all gone out of our way to look the same. So clients increasingly shop by price – just as most of us do. If two products seem equal in features, won’t we purchase the cheaper option?
The fee pressures and copycat marketing won’t be changing anytime soon, and to that we can add a more recent disturbing trend: the introduction of contract language that is overwhelmingly lopsided in favor of the owner. Have you been asked to sign any of these contracts? My company saw a contract recently that was so absurd it was probably not even legally enforceable, but both our attorney and liability insurance carrier advised, “Put the pen down and step away!” But just like there’s always someone willing to take the project cheaper, there’s always someone willing to sign an extremely imbalanced contract…
Focus on the Individual Team Members – Clients have become much more sophisticated, and many have elevated the importance of the team members when making their selection decisions. Gone are the days when AEC firms could submit 20-year-old project experience and get away with it (“Mr. Smoke, meet Ms. Mirror.”) I’ve seen some recent RFPs that don’t even ask for firm project experience – the owners want to know about each and every team member – what have they done, who did they do it for, and when did they do it? And how about including three personal references for each team member while you’re at it?
Programs like the General Service Administration’s Design Excellence go a step further, requiring proposing firms to focus their initial submissions on one or a few lead designers, and include images of the individual’s work with lists of awards they have won. If the GSA likes the lead designer(s), then the firm will be invited to the next stage of the selection process. This trend has also elevated the importance of licenses and certifications, as RFPs often require a single individual to hold a professional license, LEED accreditation, and another more specialized credential. Here’s an example from a recent Request For Proposal:
“The architect must be a licensed architect, LEED AP, and have served as Architect of Record for a LEED Certified project. They must also have demonstrated experience as lead architect for design-build projects in the $5 million to $10 million range, completed within the past three years.”
This does make go/no-go decisions easier: you either have staff that meet the qualifications or you don’t.
Have you personally experienced these trends? How have they impacted how your firm pursues work? Check back soon for the next trends post, featuring the war far talent and the era of the employee.