Desperate practices offer 20% discounts to win work
Desperate practices are offering 20% discounts to win work, according to the managing director of a specialist recruitment agency.
It raises the spectre of a return to the “bad old days” of suicide fee bids that stalked the industry for years after the global financial crash in 2008.
Martin Bennell, managing director of Frame Recruitment, warned there would be pressure on practices to be ultra competitive as the sector began to recover – and that it would probably impact on salaries.
“Our clients are being advised they will need to sharpen the pencil when projects restart and that could lead to pay cuts,” he said. “We’ve heard of people offering 20% discounts to win work.”
His remarks, made in a webinar on architectural recruitment watched by more than 240 architects from part IIs to practice directors yesterday, will fuel concerns that the profession is facing a return to ruthless undercutting.
The practice was rife for several years after the global financial crisis, with successive presidents of the RIBA including Angela Brady and other senior figures such as Rab Bennetts, Andy von Bradsky and Ben Derbyshire condemning it.
Bennell said one of its impacts was likely to be permanently lower salaries. A fifth of practices that work with Frame have introduced temporary pay cuts in response to the coronavirus crisis, a figure that tallies with separate research conducted by Building Design last month. Fosters’ is one of the highest-profile practices to have implemented across-the-board pay cuts of 20%, but BD has been told of other WA100 practices.
Bennell confirmed: “Some renowned practices are making cutbacks already.”
He said 70% of practices had furloughed staff but that only 15% had made redundancies so far, again a figure in line with Building Design’s findings.
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However he warned the number was likely to grow, with as many as 60% of practices taking advantage of government support and projects being on hold to put off decisions about job losses.
Many were waiting for details of how the furlough extension will work, he said. Chancellor Rishi Sunak is expected to tell firms they will be responsible for paying 20% of wages, plus NI and pension contributions, from August until the scheme ends in October.
“Most projects are on hold not cancelled so the opportunity to delay important decisions is welcome,” said Bennell. “Most are likely to have reduced pay and or hours and to have scrapped bonuses or dividends. They are in survival mode. No one is sure what to do.”