Market dynamics, insurance, architect’s fees and costs are just a few of the challenges facing the architecture and construction industry. As if these issues aren’t enough to keep architects awake at night, there’s the additional pressure to keep the profession relevant and vibrant in a tough economy.
National president of the Association of Consulting Architects (ACA) John Held shares his thoughts on some of these challenges facing the industry.
Professional Indemnity Insurance
The denial of Professional Indemnity Insurance to certifiers was a rude wake-up call for the industry. While it may not have seemed possible a year ago, this development is indicative of all that’s wrong in the construction industry. Insurance, after all, is just a reflection of the market reaction to risk; perhaps those who advocated in the past for a reduction in ‘red tape’ are having second thoughts. A positive outcome of this mess is the willingness shown by architects to propose sensible solutions that could improve the quality of the built environment.
Buildings are long-term investments, but are often constructed on the basis of short-term decision making and capital cost pressures. This thinking is based on the assumption that long-term problems and costs can be moved on elsewhere. Architects are often blamed for costs, but are rarely appreciated for considering long-term issues, users and the needs of the wider society.
Information is a major casualty in the current market environment – the strata owner knows little about what was built and whether it was properly engineered; the architect tendering for fees has no clue about what will happen two years into the project; and the subcontractor isn’t given all the contractual detail about risk at tender time. This information asymmetry – where one side has more information and knowledge than the other – is symptomatic of the current state of the industry.
There is a lack of clarity on who the client is in any project. Principal/agent conflict causes market failure when the objectives of the agent for the principal do not align – this means the agent is not working in the best interests of the client. There is a clear problem when architects don’t know who their real client is – the builder, agent, developer or final user.
Can market failure be dealt with by simply addressing the symptoms? No – only a combined push by industry and government can help rectify market failure. To fix this broken system, architects must step up and make their voices heard – both individually and collectively.
Conditional PI for certifiers
By allowing private certifiers to continue to practice even with conditions relating to combustible cladding in their cover, states can keep the system running for a while. However, this is a short-term fix and very likely to affect architects. What happens when alterations or additions are required for an existing building containing combustible cladding? With the certifier effectively not liable through lack of insurance cover, and the builder and developer long gone, the architect who might still be around will face the music.
The deletion of requirements for homeowners’ insurance on buildings of more than three storeys (a decade ago) is just one example of how insurance, as a market device to measure risk, used to control the worst of the industry. The excellent Deakin report into building defects notes that if your reputation barred you from getting insurance, you couldn’t build multi-storey apartments. It suggests commercial imperatives to insure and be responsible for ongoing defects would change builder’s attitudes to quality.
Working within a low fee structure, which is being driven down further, architects are increasingly finding it unsustainable to deliver professional service. While good marketing can help increase fees for architecture services rendered, some sectors such as the government tender market are immune to upselling and clever marketing. The ACA needs to have a strong voice in this sector to ensure that the value of architects is recognised and that they are compensated accordingly.
Another worrying factor is the decreasing number of architects and technical experts employed in government at all levels. This reduction of expertise within government is making procurement of capital works problematic in many jurisdictions. Erosion of fees is a major concern across the profession and is leading to poorer quality outcomes. ACA’s work on the Architects' Time/Cost Calculator is a start – it now needs to prove that sustainable fees will lead to better buildings.
Kim Lovegrove blames the lack of spending on research in the construction industry as one of the causes of the current regulatory failures. The ACA acknowledges the importance of research across a range of topics, but finds it expensive to do it properly. Funding and sponsorship of research projects will be an important part of ACA’s future strategy.
Fragmentation of services
Stephen Pearse has recently written about the problems of fragmentation of architectural services. The NSW government, for example, is looking at requiring registered building practitioners to ‘sign off’ on their designs. But is there any compulsion for the same person to sign off on the finished product? Can a developer keep engaging different people to do those signoffs? Who controls quality on site? What does a non-fragmented scope of service look like, and is this an opportunity for architects to become more involved? If architects are novated to the builder, it follows that they do not have sufficient independence to sign off work. We have to be clear to government about the need for a proper service delivery model and how we can avoid it being subverted by an industry, which has made a mess of quality and safety.
Pictured: John Held, image courtesy of ACA.
This article has been republished from Association of Consulting Architects.