RIBA Architect's Handbook of Practice Management

9th Edition

Nigel Ostime

• Publisher: RIBA Publishing
• Year: 2019
• ISBN:
  9781000705133
• Edition: 1
• Topic: Architecture
• Subtopic: Architecture General

The professional architect's business management bible now encompasses the RIBA Plan of Work 2013 to reflect the very latest practice in today's cutting-edge architectural environment.

With an emphasis on the practical aspects of working as an architect, the 9th edition combines clear and comprehensive guidance with a focus on new directions in practice management which will give a modern practice that vital commercial edge.

Topics range from starting up a practice and developing a business strategy, to how to win clients, manage people, and handle fees. It includes new sections on topics such as knowledge management, QA, IT and project management too.

With its clear, accessible layout, and no-nonsense style aimed at busy architects, this is a must-read for practices of all sizes and the ideal companion to the RIBA Job Book, 9th edition

Part 1
The industry

01 The construction industry

02 The profession

03 The law

1
The construction industry

This Chapter:

• discusses current issues within the construction industry;
• considers trends within the industry;
• lists the key roles within the construction industry;
• provides a list of useful organisations that offer support and information.

1.1 Introduction

We have undoubtedly witnessed significant change in the construction industry over the past seven years or so in terms of its composition, increased competitiveness, advancing technology and, of course, a reduction in its capacity due to the economic downturn experienced across much of the globe.

Architectural practices have needed to respond to these changes to remain in business by being flexible in their business planning and project execution. This has been a difficult transition, but there are many positives to be taken from it, including:

• the need to focus on design quality while maintaining tight control on costs – both of the construction and of design development;
• the need to embrace emerging information technology and building information modelling (BIM);
• the benefits of collaboration, facilitated by the RIBA Plan of Work 2013.

The European economy remains fragile and the key issue in the UK construction industry will remain a financial one for some time to come, with continuing public spending cuts and restricted lending for private development. Some sectors have shown signs of recovery, and there is still an enormous demand for housing, particularly in London and the South East. Large public infrastructure projects have helped limit the deficit of construction activity, but a return to pre-recession levels of activity is some way off.

Sustainability has taken something of a back seat and targets for improvement have been eroded. Framework agreements have diminished, at least in the private sector if not in the public sector. BIM has had greater uptake in the private sector, despite government dictates on public sector procurement. Payment conditions are often poor, with the public sector being better than the private, where sub-contractors and consultants complain bitterly about delays in payment causing a strain on cash flow.

According to the Building White Paper Client Intelligence 2013, of approximately £100 billion of capital expenditure in UK construction in 2012, around 14% was public spending, including 4% on housing. Of the 86% private sector spend, offices accounted for 5%, retail 6%, industrial 3% and leisure/other 10%. Infrastructure, including airports, other transport, energy, water and so on, accounted for 11%. Private housing accounted for 17% of spend. Repairs and maintenance was 35%, of which 16% was for housing.

There is a continuing trend for construction companies to look to international markets, with South Asia and Middle East/North Africa (MENA) being seen as the most significant. Political and social factors are having a significant effect on the MENA region though.

The construction industry remains a large and dynamic one, made up of a diverse collection of companies and organisations with a broad skills base and with a vitality and energy that make it a unique and stimulating environment in which to work.

It is important for architects to understand the scope of the industry and their relationship to the key parties involved:

• employers/clients;
• contractors and sub-contractors;
• suppliers of building materials and products;
• consultants.

1.2 Contracting and procurement

The RIBA Plan of Work 2013 (see Chapter 10) focuses on the benefits of collaboration and BIM-enabled procurement, reflecting the drive by both public and private sector clients to find further efficiencies, increase value and improve quality in construction output. Time will tell what impact this will have on procurement, alongside the other factors that influence how project teams and construction supply chains are engaged, not least of which is cost.

Construction is underpinned by the different methods of contracting used to procure building and engineering projects. There are many standard forms of construction contract, although the essential principles remain the same.

Building procurement methods are founded on the allocation of risk between employer and contractor – and on down the supply chain to the contractor’s sub-contractors and suppliers. Somewhere in the middle are the construction professions, who have traditionally protected the employers but who also have a contractual relationship with and liability to them – adding a layer of commercial tension.

The differing forms of construction contract either place more risk on the contractor or allow the employer to retain a degree of the risk – for a reduced price. As well as proportioning risk, the different forms of contract provide differing degrees of control over the three key performance indicators for building work:

• cost
• programme
• quality.

In any single project the correct balance between these three – to some extent competing – performance targets needs to be found, in order to best meet the requirements and expectations of the client. The various building procurement methods each place different emphasis on the relative importance of these targets, and as trends have changed – generally with changes in the economy – the differing methods have in turn shaped the direction, structure and organisation of the construction industry at any given time.

Consultants have traditionally acted to represent the interests of the employer, but today often work as a service provider to contractors as well. The fact that consultants are increasingly working for contractors when they take on design responsibilities complicates matters further. This change has required architects to adapt to a differing role and a different sort of client. Data from the RIBA Business Benchmarking Survey 2012/13 indicates that 19% of architects’ fees now come from contractor clients.

The contractual arrangements between the key parties in the industry are increasingly complex and their roles overlap to a greater degree. Some contractors are becoming developers and also, increasingly, are taking on projects before the design is complete, allowing employers to transfer more of the risk to them.

Over the past 15 years the industry has experimented with partnering arrangements of different types with varying degrees of success, but partly as a result of economic forces there has recently been renewed interest in more traditional methods of competitive tendering and building procurement as well as design and build procurement. Partnering has been a positive response to the frequently adversarial nature of construction contracts, and the inherent waste and inefficiency of the resultant conflict. Partnering involves the sharing of risk, and an emphasis on longer term relationships for repeat commissions, knowledge-sharing and continuous improvement. However, there is also a perception that it can carry with it higher costs, and may lead to complacency – as opposed to the cut and thrust of competitive tendering. The truth is no doubt somewhere in the middle. Regardless of this, it is generally recognised that collaboration within the design team and the wider supply chain (particularly when aligned to BIM technology) can bring significant efficiencies and improved quality to the project and the RIBA Plan of Work 2013 facilitates this.

Design and build favours delivery time and cost; traditional single-stage tendering tends to result in longer programme timescales but gives closer control – in theory at least – to cost and quality; construction management gives programme benefits, and two-stage tendering provides a halfway position – reducing programme but with a potential uplift in cost.

Whole-life contracts, with design-construct-operate agreements, such as PFI, continue to be used for public works and on commercial projects. Design and build is the norm when the type of project is appropriate – and sometimes when it isn’t. Construction management is used less than it was 10–15 years ago, and this may be indicative of the increasing importance of cost certainty. Employers naturally look for a guaranteed maximum price, and margins are getting ever tighter, for consultants as well as contractors. This tightening of profit is forcing consultants to find more efficient ways of producing design and, encouraged – or perhaps coerced – by the insurance industry, place a greater emphasis on managing their risk (see Chapter 11).

For many larger projects the architect’s traditional role of lead consultant has been reduced, and although the team may be led by architects, frequently this will not be case. The RIBA Plan of Work 2013 adopts the terms ‘project lead’ and ‘lead designer’ for the individual or practice that performs these functions on projects of any size.

The project may be procured through a core relationship between consultant and ‘constructors’, possibly through the use of design and build or construction management procurement, or through the use of traditional procurement coupled with a partnering charter, or through the use of a multi-party partnering contract. Although these arrangements will generally be confined to larger projects, and the role of the ‘general practitioner’ architect will undoubtedly continue, even smaller practices may find themselves asked to participate in partnering arrangements or to join consortia. It is essential that architects take a proactive role in managing their response to these new arrangements, and seize new opportunities where they arise.

1.3 Future trends

So where is the industry heading and what are the key issues facing it today? The past few years have seen a continued increase in:

• the importance of equality and diversity in the workforce;
• the importance of managing risk;
• technological advances;
• reliance on electronic means of communication;
• consolidation of businesses; and
• globalisation.

Sadly, to this list one could add increasing insolvencies. This has led to clients taking a keener interest in the financial health of their teams, although unfortunately it has not resulted in improved payment conditions, which are still poor in some areas. Consequently, stability is currently one of the three most important criteria for selection of a contractor, the other two being price and quality.

One could also add that while the need for sustainable design solutions and construction methods is acknowledged, there has been a deceleration in regulatory reform and clients are putting far less emphasis on it than on commercial criteria. Interestingly though, BIM comes lower on the list of priorities, for contractors at least.

Innovation remains important in selecting the team, particularly where it can bring commercial advantage, and site safety continues to be taken seriously, although accidents and fatalities remain too high.

Sustainability has regrettably become a lower priority for clients as a result of tightening financial constraints, although the need for a sustainable approach is unabated. Construction continues to have a major part to play, with the built environment being responsible for around 45% of carbon emissions. (It should, however, be noted that new buildings account for just 1% of the total stock.) Legislation on the environment continues to evolve; see Chapter 3 for further guidance.

New buildings an...