Architects lack business plans

Nearly two thirds of architects do not have a business plan and of those that do only 13% plan beyond one year, a comprehensive survey of the industry has found.

The Royal Institute of British Architects (RIBA) 2012/13 Business Benchmarking Survey has revealed that only 62% of RIBA Chartered Practices have a business plan and, of those that do, only 13% plan beyond one year.

The survey also found the average profit margin for architect practices was around 22%, with margins falling the larger the practice. Almost 40% of large practices (50+ members of staff) make less than 10% profit.

Other trends identified by the survey include:

• Chartered Practices have a combined income of £1.58bn of which, almost half is earned by large practices (which comprise just 3% of all practices)
• 20% of income comes from projects outside the UK. This leaps to 36% for large practices and 33% for London practices
• 30% of the workforce is female: 76% of non-fee earners but only a quarter of fee earners are women
• The percentage of women falls by seniority: 40% of Architectural Assistants but only 12% of equity Partners or shareholder Directors
• 50% of the profession’s work is won as the result of a direct approach with no competitive process; 21% is won through straight fee bids
• One-off houses account for 9% of the profession’s fees. The residential market accounts for 25%; education for 15%. Mixed use (13%) and offices (11%) are the only other sectors to contribute more than 10%

RIBA President Angela Brady said: “One key element exposed in these latest results is the acute split in business management, profitability and specialisms of between large and small practices on how to make the most of their own position in the market place.

“What is clear is that if growth is on the agenda for a practice, then simply being a great designer, or a good project runner, is unlikely to be enough.

“Practices must identify a clear proposition to its target audiences with client-focused leadership and efficient business management - as well as great design.

“The RIBA is committed to tailored support and guiding for practices of every size. One element that I remain hugely concerned about is the gender inequality that continues to pervade the profession, with a massive drop-off in equal representation as seniority rises.

“We need to do much more as a galvanised profession to erase this as an issue.”