Lead, follow, or become commoditized

I have been interviewing Circle of Excellence firms this month and asking the question, “where do you see the A/E industry headed over the next 3-5 years and beyond?”

The first couple of COE firm execs I queried went directly to “there will be more design-build projects”. The opinion of these top execs is that a design firm has two choices: 1) develop a strategy to lead D-B projects that includes things like changing firm culture to accept the risks and educating clients on the merits of D-B projects in order to make the client comfortable with their designer as lead; 2) accept the role of sub to CMs who lead D-B projects, but offer value-added services (e.g., program management, master planning, facilities management, etc.).

These top firm execs agree on one thing: to do nothing means succumbing to commoditization and being compelled to lower fees –even in market sectors which are hot (e.g., government work) or have pent-up demand (e.g., health care) and in which design firms should be able to charge reasonable, but healthy fees.

The tactics for overcoming this challenge are fairly straightforward – and frankly, are not materially different from what PSMJ has been advising clients to do since the beginning. It comes down to the usual things: relationship-building with clients, CMs and other players in the building process, training staff in the technology that makes it possible to lead in the D-B process (BIM), marshalling financial resources, and choosing the right people (or acquiring the right firms) to affect this type of strategic move.

More on this in the August issue of the Professional Services Management Journal and in the book "2010 and Beyond: Preparing Design Firms for the Upturn" coming this fall.

Until next time,

Bruce