Recently I was working with a strong builder team in the Midwest to reduce cost of construction and raise margins. The approach was to leverage the vast knowledge of the trades and suppliers, applying Lean design principles to their current construction documents. As part of the review, their outside architect was in attendance. I’ll call him “Bob.”
As we dug deep into the plans to find cost savings, I noticed a disturbing pattern. Each time we began marking up the plan sheets, I could sense Bob was getting edgy. He stood quietly and observed from the back of the group watching, often grimacing, as we covered the sheets in red ink. His body language clearly telegraphed his frustration. Bob approached me for a private discussion and confided he felt taken advantage of.
Bob’s firm had developed an extensive package for the builder including at least a dozen plans with several elevation alternatives and endless options. In total, there were well over 1,000 sheets. Each time someone from the builder’s office requested a change, Bob would dedicate two or three of his people to the job. Each round of revisions required several days to complete, due to the large number of plan sheets.
This scenario often played out weekly. Bob told me his company was bleeding margin, and if this continued, he would be forced to end the relationship. I asked if he was on monthly retainer with the builder. His expression told me he was. Bob was receiving continual revisions from this builder. The revisions might come from anyone: a superintendent, framer, plumber, electrician, etc. Since the architect was on monthly retainer, priority service for the revisions was expected—and provided. Yet the cost to make revisions often exceeded the value of the retainer.
The time Bob’s people spent making endless plan changes should have been spent on more profitable jobs for other builders, and they were falling behind. Conversely, the builder’s employees felt the architect was paid handsomely and thus high priority, almost instantaneous response was expected. The builder-architect relationship was going downhill fast.
How to Avoid This Lose-Lose Scenario
I have witnessed this scenario many times, and it always ends like this: The builder wants to ensure the retainer’s value, thus wants to use the architect’s services continually. The retainer amount is constant although the revision volume can vary wildly. In the beginning, the architectural firm gives the builder priority service. Over time, they realize the negotiated retainer is light and providing priority service is daunting. Eventually, the relationship sours and ends, forcing the builder to start from the bottom again. It’s a lose-lose scenario.
There is a better way, an industry “best practice.” The builder appoints one of their own team members to manage all plans. The architect does the same, so each company has a clear point of contact. Every requested revision is reviewed together by each firm’s “plan contact” prior to making any change. Before work goes forward, the architectural firm provides an estimated cost and builder approves. Now, the architect is fairly compensated for their time and the builder understands the true cost of making revisions. Plan changes are naturally managed to the least costly impact, and the process becomes much more organized. Win-win.
Does your company have an architect on retainer? If so, I highly recommend you reevaluate that scenario. Not only can it save you cold hard cash, better utilize resources in both firms and simplify the process, it may also save a valued relationship. Long-term, mutually beneficial relationships are a cornerstone of a successful business.
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