Ray is the president of Kogan and Company, a strategic management and planning firm specializing in the AEC industries. Ray shared with us 8 points that can help in that regard.
1) Demographics
Unlike other trends, demographics can be accurately anticipated. “Like waves in an ocean, you can see them coming a long way away and pretty accurately predict when they will crash on the shore.” Today’s US growth in population is no longer strictly from US births, but largely from immigration. This growth represents an opportunity for the AEC industry. Understanding these trends can help position your firm to better react to continually changing markets.
2) The Markets
A growing population, wherever they are, will need places to live, and these added “rooftops” will have a ripple effect of requiring more services such as healthcare, education, commercial spaces, the redevelopment and re-purposing buildings as well as new infrastructural investment. This fact creates a strong market for architectural services.
Related to markets is the increased competition for and ultimate commoditization of our services. There is a proliferation of firms that increases this fact.
3) Technology
New technologies such as BIM will affect our profession in numerous ways. Already becoming widely adopted, this technology will continue to permeate our industry and will ultimately facilitate- even force- collaboration among industry partners. This means more upfront work on projects and can create a gap between those who can quickly adopt to this technology and those who cannot. There are also contractual issues as this technology presents opportunities as well as posing threats for firms to consider.
Social media is also a new technology that is quickly transforming our industry. Social media affects project acquisition, firm management and can blur the lines between work and non-work life.
4) Your Projects
Contractor-led design-build and contractor BIM usage leads to expanded roles for GCs. This can be a direct threat to design firms in that our services can be marginalized. This trend also presents opportunities for design firms in that we can assist in a more collaborative delivery process and include pre-construction services in our scope of work.
Integrated project deliver is an emerging project delivery system that can produce complexity and collaboration, sharing the risk and reward among owner, design team and contractor. This delivery system is facilitated by BIM and other technologies, driven largely by other non-design parties, but is also supported by the AIA. This delivery method also offers an extended range of non-design services blurring the lines of traditional roles and responsibilities.
5) Your People
Architecture firms will face a skills shortage in the near future. Population trends will mean smaller employment pools: 35% of AEC workforce is older than 50. The current economy has driven large swaths of professionals out of the AEC industries.
There are numerous contributing factors to the upcoming labor shortage
-long-lasting impact of the current recession
-ongoing recruiting, retention and reward challenges
-attracting architects vs. other professions
-Talent will migrate to more profitable firms and away from “pure” architectural firms
What can firms do? Develop a training and development program. Mentor employees’ career development. Be flexible with work arrangements and actively listen while really caring.
6) Your Leaders
“If a firm is short on money it can borrow, if a firm is short on work it can market, if a firm is short on leadership the challenges will be both quantity and quality” In an increasingly complex world, the next generation had better be better than you! Smarter, faster, and more entrepreneurial. Leadership succession hurdles become ownership transition hurdles. There are more sellers these days than future buyers. This will contribute to industry consolidation.
7) The Industry
Over a thirty-eight year period the construction industry has remained fairly constant. The total US construction industry has only grown .82% per year on average, while the total number of AEC firms has grown roughly 4.5% per year. Competition is increasing. This will lead to simultaneous consolidation and expansion.
“Architecture is a profession and architects are professionals, but architecture firms will have to succeed as businesses.”
Our Resources
-Sustainability. Increasing pressure to incorporate sustainable design into projects and adopt sustainable business practices. This comes from both inside and outside our profession.
“It is not the strongest of the species that survives, nor the most intelligent, but the one that is the most responsive to change.”- Charles Darwin
Thank you Ray for an insightful presentation!
Adam Hillhouse, AIA, LEED AP BD+C
Hillhouse Architects, Inc.
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AIA Colorado Practice and Design Conference 2011
