Design on the Cheap? Think Again.

by Cynthia Kemper. Originally published in the June 2015 issue of Colorado Real Estate Journal’s Building Dialogue, Cynthia Kemper’s Colorado Pulse column. A response from Paul Wember can be found after Ms. Kemper’s blog.

Earlier this year, I read an editorial comparing selecting architectural services to bargain shopping for cars, homes, and, believe it or not, toothpaste. The author’s rather strange premise seemed ripe for a counterpoint, or at least an honest look at what can happen when a client opts for low bid architectural or design services. Since we all prefer to make informed choices when it comes to such important decisions, this month I’m going to pull back the curtain with a candid look at the reality of bargain basement design.

For starters, serious architects do much more than draw plans for structures with four walls that hold up a roof and keep the weather out. They are highly trained, talented, passionate professionals that provide a unique service to their communities—a service no less important than that provided by attorneys, accountants, doctors and engineers. Comparing legal or financial services to buying toothpaste would be laughable, but for some reason the contribution architects make to society is fair game.

Fortunately, many clients know that opting for the lowest bidder is rarely the best strategy. They’re informed, and want the best outcome for their projects having learned, likely through experience, that you get what you pay for. Here’s why.

When architects decide to lower their fees, they may indeed be “hungry” or just trying to survive, as in the case of the recent recession, which peaked in 2009. Or, firms, on occasion, may choose to write off the difference as a marketing expense when they’re trying to enter a new industry sector, but if reputable firms are cutting their fees during good times, buyer beware.

“You evaluate everything in terms of risk,” explains Jeffrey Sheppard, AIA, cofounder and design principal at Roth Sheppard Architects. “Lowering fees to break into a new sector is considered a marketing expense, but with the understanding that you will raise them again eventually.”

He continues, “Most clients are unaware that when firms cut fees, they usually put a lower-level, less expensive, less experienced staff member on the project. If you want to stay in business, it either needs to come out at the front end (providing a client with fewer alternatives and less exploration of potential design options, resulting in less innovative, effective solutions], or the back end (quality control and assurance). Low bid can also translate to old designs being recycled, and new innovative ideas just not pursued.”

“A low fee is exactly that, a low fee. So, what’s not included is as important or more important as what is,” adds AIA Colorado 2015 President Angela Van Do, AIA, senior associate at Boulder Associates. “Design services are often thought of as a commodity, like going to Costco. Clients think if something accomplishes basically the same thing, why would I spend the extra money? But the devil is in the details.”

She continues, “A low fee doesn’t allow for a lot of creative thinking, innovation, exploring other ideas—or if there’s a better way to do something. You never want to design to the fee, but sometimes when fees are cut really low you just do the best you can with the time you have.”

Van Do explains, sometimes firms will eliminate some of the less tangible elements of the design process, often without the client’s knowledge. “There’s no time for problem solving and thinking through things more carefully,” she notes. “Or for asking, is the owner getting the best product? Is there a more efficient way to be going about this? Is there a more current approach or better material we can use?”

Ultimately, clients also miss out on the opportunity to have a professional team advise them—to help them understand their project and goals better; to seek out better delivery methods and sustainable approaches, etc. that can turn into cost savings or a more satisfied occupant.

Instead, “the client gets a cookie cutter solution, which is all they pay for,” shares Van Do. “They are just getting something off the shelf. A template.”

Sheppard adds that the quality construction administration is also impacted. “If you’re cutting your fees to nothing, the money has to come from somewhere. Who’s checking the work before it goes into construction? Because you don’t have your best, most qualified people working on the construction drawings—the most critical part of the project—you have a higher risk of something going wrong. The issues don’t show up until construction begins, turning what would normally have been a great project into everyone pointing fingers and no one happy.”

“By the end of the project, the client is going to wish they had gone with the team that was the most qualified; the team that asked for a fee most appropriate for the work that needed to be done,” he concludes.

Granted, there are times when a client has a limited budget and expectations, or they see the value, but they don’t think they can afford it. They may not need an architect.

Others assume that if they want a no-frills building—just four walls and a roof—the fees should be next to nothing. But, design is about more than just the value of design to the owner, it’s about its value to everyone who lives or works in that building. “All architecture has an impact on the public realm. Enlightened owners know they can do positive things with their buildings no matter their size, or where they’re located,” adds Sheppard.

Van Do continues, “Design is not a commodity, it’s a service. An architect engages and becomes part of a broader team. I think that is often overlooked. Architects really want to work with their clients and have them actively engaged in the design process. It’s not just about the building, it’s about how it’s used. People use a cheap building very differently than one that’s been thoughtfully designed.”

She adds that it can be demoralizing when great ideas must be eliminated from a project (other than safety and code compliance) because there just aren’t enough hours allotted. “No one gets into architecture because they want to design ‘just good enough,’ ” explains Van Do. “They want to do their best—something they are proud of. When you cut your fees, it limits what you can produce and what you can deliver.”

She adds, “For a designer, long hours and not getting paid for the time invested—combined with one’s contribution being unappreciated by the client—leads to burnout, then turnover.”

In conclusion, Van Do points out that architects are used to working within budgets and time constraints, but they also want to be realistic. “We know that clients have a set budget, others they are responsible to, and objectives they need to meet, but as professionals, architects can’t provide the services a project requires if they’re hamstrung with low fees,” she explains. “The goal is fair and realistic fee structures that allow an architect to deliver their best services within appropriate parameters.”

“There needs to be a give and take, and consideration of the fair market value for our services. Constant cutting serves no one in the end,” she adds.

Cynthia Kemper is the founder of Marketekture, a Denver-based consulting practice specializing in the creation and implementation of thoughtful, results-driven market development and public/media relations strategies for leading architecture, design and engineering firms since 2004. 

Continuing the Conversation… 

Thank you to Cynthia Kemper, Jeffrey Sheppard, and AIA 2015 President, Angela Van Do, for taking the time to write a thoughtful counterpoint “Design on the Cheap? Think Again” to my blog “The Silver Linings of a Low Bid” both of which were originally published in the Colorado Real Estate Journal’s Building Dialogue publication, and also on this blog. Cynthia discusses the consequences and autonomy of bidding low, and why, aside from breaking into a new market and writing it off as a marketing expense, it is not good business and certainly not doing our collective industry any favors. I wrote “The Silver Linings of a Low Bid” not to persuade colleagues to lower their fees, but to address the realities of the “low bid”.  As a licensed Colorado-licensed Architect, I, too, am frustrated that the services my colleagues provide are not valued more highly. Cynthia and I would like to keep the conversation going and invite others to weigh in.

In Cynthia’s article, Van Do says it well when she states, “Design is not a commodity, it’s a service. An Architect engages and becomes part of a broader team. I think that is often overlooked.”  The Architect that can solve problems, meet budgets and enhance not only the project, but the community it surrounds, is the right firm for the job, not the one with the lowest price tag. The reality is, however, that people feel good about “saving” money. During the hiring process, I have often seen that when an Owner can’t distinguish between the qualified proposing firms’ services, they will look for a metric, and, sometimes cost is the easy target. As an Owner’s Representative, I have had the unique opportunity to sit across the table from Architects during the interview process. After eleven years, I am still amazed by the questions asked by some clients; it’s painfully evident that some don’t have an understanding of the design process and the inherent costs necessary for proper planning. From what I see, it’s not that they don’t appreciate the services being offered, rather, they don’t understand it’s in their best interest to invest more in the design phase, thus resulting in a superior facility.

Architects, like all other businesses, set their fee to cover costs and obtain a reasonable profit. When proposing on a project, the Architect should have a solid handle on what it takes for them to analyze the project, work as a team, be innovative, provide quality staff and observe the project for a high level of construction quality. Clients assume this is the case and that each firm’s services are fairly similar. If you are competing against a firm that you are confident will propose a lower fee, it is paramount you address the subject during the interview head on. Explain how you calculate your fee and why hiring your team is the best decision they can make, even if you cost more. Have the conversation live and in person and make a strong case. Honestly, from what I have seen after helping managing over sixty projects (reviewing about 160 proposals), I have yet to see any consistent correlation between higher fee and better service.

If the Owner is simply asking you to reduce your fee with no consideration of scope, schedule or other considerations you need to analyze if this is a client with which you are comfortable working.  We encourage our clients to have a conversation about the value of the service and the relative fee, working together is the best way to find the right balance. I have also found over the years that “low fee” is a relative term.  A smaller, more nimble company may be able to submit a lower fee. If your competition can provide a lower fee and convince the selection committee that they are still qualified than a larger, more established competitor, they have a strong chance of procuring the work.

What are your experiences with “low bid”? Have you been burned or do you have a success story?