Build on Success
31 March 2009 Peter Morrison
While it enjoyed the good times, the architecture sector has left itself open to the pressures of the downturn and the dominance of consultants. Peter Morrison of architecture firm RMJM tells CEO why the industry should consolidate, and the benefits of creating a harder entrepreneurial approach.
"Architects operate in a very fragmented market," explains Peter Morrison, CEO of UK-based architect firm RMJM. "We’re the seventh largest architecture practice in the global market place, with 14 international offices and 1,200 people. There are a large number of small companies operating in this market sector and I think consolidation is probably the only option."
As the global downturn bites and project lists shrink, the firm still has $15bn-worth of projects on its books. Morrison believes RMJM’s strengths lie in its geographical spread coupled with its formidable size. Indeed, he says larger architectural practices will be better equipped to deal with the credit crunch and, in the case of RMJM, attract more sovereign-funded clients who do not rely on bank finance. These clients will be looking to big architectural practices to deliver projects.
Given the atomised nature of architecture firms, Morrison says RMJM is still committed to pursuing growth through M&A and believes the market is ripe for consolidation. While many industries, with greater or lesser success, have sought to consolidate a range of complementary business processes, architecture, with its professional patina, is one of the few that has, until now, avoided the move. While the downturn is making it tough for everyone, the best organised firms have the chance to pick up business opportunities.
Blueprint for the future
When he became involved with RMJM in 2002, Morrison wanted to find a way of putting a commercial, financial and business infrastructure into the company practice. "This allowed our architects to focus all of their efforts on architecture, rather than what happened in the past, which was focusing partly on architecture and the rest of their time on running the business," he says. Morrison believes this approach put the firm in a strong position in a bull market. "We’ve always been relatively lean in terms of our infrastructure, because the people who are running the business are here to provide the most efficient support for our architects. We are passionate about creating the idea and taking it through to the construction of the building," he adds.
For Morrison, part of the problem is that over the last 20 years architects have lost control of the construction process, to the extent that business consultants are starting to move into the market. "It wasn't long ago that architects were generally regarded as master builders within the profession," he says.
"However, that’s been lost because of the people who draw pretty pictures and expect other people to deliver it." Taking back control means providing not just the designs and construction oversight, but also the quantity surveying and the provision of funding for a project.
Until the economy began to turn, Morrison was amazed at how few clients produced architectural mandates without having a clear idea of what they were prepared to pay for the building. "When everything was going sweetly and there was more money than sense around, budgeting wasn’t high on anyone’s agenda," he says. The worry about cost came later as clients used consultants to define and refine a final figure from the chosen architect’s designs. Morrison accepts that since architects are paid on the basis of the overall construction value, they have the ability to drive the price upwards.
"This should not be an issue if everyone is singing off of the same song sheet. The way we work at RMJM is to be part of the client team where there is a budget and we work within its constraints. The cost consultant, responsible to the client, will always be necessary," he says.
For Morrison, focusing not just on how a building will do what is required of it, but on its costs throughout the design and construction process, can bring real added value.
He also believes that the architectural profession is now ready to transform itself this way. "Our long-term strategy at RMJM is to create a presence with wide-ranging skillsets within the architectural industry. The opportunity for companies with the right structures and the right leadership to combine a great number of different skills is definitely there," he says.
"What we want to do is take back that degree of control which the industry has lost. We want architects to be leaders within the construction process. The establishment of our programme at Harvard University’s Graduate School of Design, which ensures that graduates are armed with design and business skills, is all about that. It’s about creating not just great architects, but design leaders."