Global Economy Will Impact All Firms, Some for the Better

October 7, 2008 · by DesignIntelligence

The changing global competitiveness and financial environment is unfolding dramatically, which will add further complexity into the realities of professional practice leadership.

The changing global competitiveness and financial environment is unfolding dramatically this year -- more so than any other time in the past 15 years. “The restructuring of the capital markets and new credit limits will add further complexity into the realities of professional practice leadership challenges,” according to James P. Cramer, chairman of The Greenway Group and founder of the Design Futures Council. “The strategic plans of professional firms are now rapidly being modified as the traditional expectations in real estate planning are being rocked by economic change.”

U.S. fees billed by architecture and related firms are down an estimated $3.5 billion gross revenue from a year ago, according to research by the journal DesignIntelligence. Respondents to the Multinational Design Firm Fee Survey report that their backlogs of work under contract are eroding in each building category. Notable exceptions include health care and higher education. The construction work force has lost just under a half-million employees over the past year, mostly in residential construction. These shifts will have impact on all in the AEC industry, notes Cramer.

The situation is similar but also curiously different in global practice. The DesignIntelligence survey, which was conducted in July and August, focused on the expectations and experiences of leading U.S.-based architecture firms engaged in international work. The top 30 firms in the study billed more than $1.3 billion on foreign projects alone. Notwithstanding current economic woes, this new record of exported professional services is expected to grow further in 2009, according to the survey, by perhaps 4 percent to 7 percent.

The September/October issue of the DesignIntelligence reports the Multinational Design Fee Survey and evaluates the global growth of U.S. firms over the past 10 years.

Among the findings: Last summer, the top 30 design services exporting firms estimated they would grow just below 10 percent in international fees in 2009. Leaders of these firms have scaled back their expectations somewhat, but not as dramatically as one might logically expect given reports in the general business media.

Rapid gains in productivity have driven prosperity for many professional practices and underpin strength to weather the current economic storms. In the survey’s 10-year history, some firms have grown by nearly 20 percent per year. HOK, for example, grew in international fees from $58.5 million in 1998 to a projected $320 million by year-end. Taken together, the top 30 firms in the survey have shown an increase of nearly 33 percent in professional service exports over a year ago. But what a different one year can make.

“Unprecedented financial shifts are difficult to adjust to, and yet the need to serve clients will increase over the next five years -- even in recessionary conditions,” according to Cramer. He recommends that professional practices jettison anti-strategic expenses, adjust their business model to recognize new economic factors, prepare a contingency plan to stay strong financially, and keep innovating, especially in technology and building a culture of entrepreneurship.

“The threats ahead are real,” says Cramer, “but the strongest professional service firms are primed for continuing success at even higher levels and with more differentiated relevance than ever before."

MORE INFORMATION

DesignIntelligence Multinational Design Fee Survey

Post Comment

DFC Announces New Commitment: The Portland Promise

Jan 28, 2013 · by DesignIntelligence

Design Futures Council Announces Changes to the Nantucket Principles with a new Commitment: The Portland Promise Read full »

First Charges Filed Under U.K. Bribery Act

Oct 4, 2011 · by DesignIntelligence

With an increasing number of architecture and design firms entering into contracts overseas, it's essential to understand the implications of the laws and regulations such as the U.S. Read full »

DFC Fellow Phil Enquist Addresses PennDesign Grads

Jun 2, 2011 · by DesignIntelligence

On May 16, Phil Enquist, partner in charge of urban design and planning for Skidmore, Owings & Merrill, addressed the graduates of the University of Pennsylvania School of Design. Read full »

Hope Amid a Slow Construction Comeback

Jan 11, 2010 · by DesignIntelligence

25 trends transforming architecture and design indicate there are opportunities amid the sluggish recovery. Read full »

SCADpad

How Firms Succeed 5.0

Topics

DI.net RSS Feeds

DI.net on Twitter

Research Support