Results of latest reader survey find 40% haven’t even started planning
Almost 95% of practices do not have a plan in place for how to rebuild their business after lockdown, according to research by Building Design.
And 40% have not even started recovery planning yet, as they focus on moving their entire operation to home-working, work out how to furlough staff and try to keep existing projects on track.
Among other key findings are that 93% of architects who responded are concerned or very concerned about their practice’s financial position, with 72% saying they can only survive for six months or less.
How concerned are you about your practice’s financial position?
Nonetheless, while 27% said they are extremely concerned about the future, just over half said they are confident or even very confident about the future of their business. More than a quarter said they can survive for “as long as it takes” and 54% said they are still receiving inquiries.
Architects’ main concerns about the medium- to long-term future revolve around cash flow and loss of client confidence, as well as the planning system which one described as “the most unproductive and costly work stage now”.
Steve Porter from Dorset’s Porter Haworth spoke for many when he said the main risk to his business was, “lack of confidence among private clients driven by a government not seen to be making sure the wheels don’t fall off the economy”.
Anthony Hudson, founder and creative director of Norwich-based Hudson Architects, summed up his worries: “[Not] being able to move forward on early stages of projects because of a breakdown in the planning system which could mean a wholesale destruction of our work pipeline over the next year.”
Another said: “Fewer clients willing to commission projects – most just waiting and seeing what will happen – zero amount of certainty at present – no exit strategy from government and so no focus on getting business back on its feet.”
>> Also read: How to keep your practice afloat
What staffing measures is your practice taking to mitigate long-term damage?
Three-quarters of the architects who responded to our second coronavirus survey are owners or directors, a majority of them running small practices. A fraction over 50% said they are furloughing staff, with 15% saying they will be making redundancies and a fifth asking staff to take pay cuts.
Over 40% said work has stopped or slowed on schemes at detailed design stage or about to start on site, and 35% said this has happened on schemes at RIBA stages 0-2.
What impact is the crisis having on schemes on the drawing board?
More than 30% said work had stopped on sites, and a small majority said they were also struggling to source materials - a figure that rose to 62% in the survey results for the whole construction industry.
>> Read Mark Middleton: Cash, clients, staff – and tough decisions
What you said
Q What do you think will be the main risks to your business over the medium to long term?
:: Freeze on new work. Cash flow on invoiced work. Bottlenecks on planning and consultant work causing delays.
:: Brexit had already caused some of the bigger firms to take on the small-scale work we specialise in, so competition has already been mounting since the middle of 2019. I expect small firms to be increasingly squeezed out by under-cutting of fees from larger firms taking on loss-leaders to retain staff. I am a sole practitioner so will have to work out how to generate a different type of project. This takes time, so I expect 2020 to be difficult. One solution is to join a larger project/grouping/office for this period.
:: Cash flow… in the third/fourth quarter of the year, when the impact of low incomes in the second quarter really have an impact. Indefinite postponement or cancellation of projects for a few years, as income/cash flow doesn’t allow them to continue. Private sector inability to invest.
Q What is your biggest challenge at the moment?
:: Spending too much time on current workload eroding profit.
:: Making sure our staff are OK. We are most concerned about those on their own or trying to handle younger children.
:: Ensuring business development continues to allow a future workload in place.
:: Staying motivated with a heavily reduced workload and poor future outlook.
:: Managing day-to-day changes from external events whether opening/closing of construction sites, planning departments extending deadlines or not signing off decisions, clients postponing/cancelling projects and then reversing decisions.
:: Turning round day-to-day drawing/specification work without experienced staff, all presently placed on furlough.
:: Keeping up with demand for CDM/HS covid-19 advisory services for contractor clients.
Q What measures does the government need to take to ensure a rapid recovery once lockdown is eased?
:: Reduce bureaucracy, and ensure payments are streamlined.
:: Public procurement on a large scale. Similar to 1950-1960s levels.
:: Ensure loans and grants are available to encourage construction projects. Phase in any taxation or whatever is needed to fund the crisis slowly and gradually so as not to stifle any recovery. Retaining furlough, covid loans etc availability for a period after lockdown to allow businesses to recover somewhat before full impact of reinstatement of payroll and similar costs.
:: We need a detailed exit strategy to avoid a second period of lockdown.
:: Provide local authority funding support so they can accelerate backlog of planning and building regs applications + stimulate materials supply [import / export] to manufacturers, suppliers, builders merchants, etc.
:: Mandate fixed fee procurements across all projects funded by public sector for 1 year to prevent a catastrophic race to the bottom. Endure big firms don’t sweep up all the work.
:: They need to create an environment where clients have a reason to build. It may be a good time to force and finance fabric upgrades towards zero carbon, because clients are unlikely to be building many new buildings for a while.
:: Review and build on the opportunities that have surfaced - not push for an ideological return to a facsimile of the 2019 economy.
Q Have you started a recovery plan?
:: It is impossible to go very far without any kind of timescale from the government.
:: We are continuing to work so a recovery plan is not really required at present. Our main concern is for isolated and furloughed staff as well as long term economic impact on our clients.
:: Learning from networks where the market will be after this; planning staff training/ upgrading skills.
:: We review expenditure and income projections on a weekly basis, but to be honest we have always done this. We review resource and workload in the same way. We are revamping our social media and digital profiles and actively discussing collaboration with other similar sized organisations. remote working will play a larger part in our business in the future which gives reason for thought over premises and associated costs.
:: Mainly marketing. New sign boards, Google advertising plan.
:: Considering redundancies and slimming down admin roles especially within non-fee-earning areas of the office.
:: Continuous (worst case) cash flow analysis, fee projections, concentration on new business and new markets, ensuring all our management systems and tools are fully up to date to put our business on a stronger footing - meeting health and safety, business management, design management etc standards.