Scott Livingston

The technological revolution that is just beginning to hit the AEC industry has the potential to dramatically lift profitability for firm owners—and in doing so lift compensation for architects. To get there, firms will need to have a better strategic vision of how to harness these technologies to make the design process more efficient.

Architects, as well as the entire AEC industry, have been on a solid run over the past several years. Since the current construction recovery began in 2011, spending on construction projects nationally has increased almost 10 percent per year and, as a result, payrolls at architecture firms have increased about 4.5 percent annually. As a profession, architecture is almost back to where it was when the Great Recession began in 2008.

Business conditions have been so good that we may not have noticed that the design professions are still stymied by many of the same old business problems. Fees continue to be under tremendous pressure, even though many firms have more work than they can comfortably handle. Maintaining profitability remains a challenge for a significant share of firms. Compensation for architects continues to be well below that of other professions with comparable educational requirements; architects bemoan the fact that many of their college classmates who chose careers in law, medicine, business management, or technology had higher starting salaries than they likely will see even after 15 to 20 years of architectural practice.

There are many reasons why architectural practice remains challenging from a business perspective. Phillip Bernstein, an associate dean and senior lecturer at the Yale School of Architecture, points to the architecture business model as the chief culprit. Many firms price their services as a commodity—for a fixed price or as a percentage of the costs of construction—which typically doesn’t provide a premium for a superior design solution. If architects were instead rewarded based on the performance of their designs—health facilities that improved health outcomes, schools that enhanced educational performance, or offices that commanded higher rents—owners would no doubt be willing to increase fees commensurate with these outcomes.