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  #1  
Old 06-01-2011, 08:14 PM
RIAD_BSC RIAD_BSC is offline
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Default Some architects (and other professionals) think the world owes them a living

Some architects on this site, and elsewhere, are constantly moaning about a "race to the bottom" on price, fees and quality. They are unhappy at being undercut, they want prices to be somehow artificially inflated, and they have their heads in the sand when it comes to current market reality. They want price control, market control, and they are in denial in my opinion.

I also have a big problem with scare stories (peddled here and elsewhere) by vested interests regarding other architects who have faced up to market reality, and who have slashed prices to bring in business/cashflow, and to ultimately survive. ("Don't go for the cheap guy because your house will probably fall down. He must be a charlatan at that price. Beware, or you'll be sorry. Go for the higher-priced guy, because he must be kosher.) That sort of thing.

I think this sort of stuff taints the advice given to some punters, because the advice has a hidden agenda, a subtext, which is to further the lot of architects and artificially boost prices. I don't like it, and it should be highlighted for what it is - spin.

Ireland is overflowing with architects, all of whom are hungry for work, because there is very little of it out there. That's tough if you are an architect with bills to pay, really tough - and those of us lucky enough to have a bit of an income should sympathise. But it is great if you are a consumer looking for an architect, or a photographer, or a graphic designer, or whatever you're having yourself. Prices are a fraction of what they were during the boom. Hurray!

I recently sought prices from several architects - all RIAI registered and qualified - to design a modest extension to my home (design only). The range in prices was unbelieveable for essentially the same service (all of them said they were pitching for the business according to RIAI guidelines). From well under €1,500 incl VAT to €6,000-plus-VAT-plus-a-moxy-load-for-spurious-miscellaneous-unspecified-"expenses".

Some of these guys have faced market reality, and some haven't. All of them have the same letters after their name. All would provide references. All would have to file designs adhering to the same building codes and regulations. Standards might differ, but not by more than six grand's worth.

Architects prices are so low because there is way, way too many of them. The low prices will drive many of them out of business or else abroad - mainly the ones who won't roll with current pricing trends, the really bad ones, and the ones who refuse to adapt to current market reality. Only then will the market stabilise. It is simple economics. Ireland needs to shed lots of architects for the future sustainability of the profession. Hacked clean for better bearing, as Thomas Kinsella said.

But you know what? That's not our problem.

The best one that I have heard is the architect who thinks that prices should be artificially bumped up because s/he went to college - "a reward for third-level education". So did half the rest of us, boss. What do you want? Government price control?

In the meantime, consumers, let's make hay while the sun shines. Don't be put off by people who say to you that it is unfair on poor architects that you have hired a guy at a price that they view as too low. We are not obliged to maintain whatever lifestyles or cost bases they have chosen to have for themselves. These same people wouldn't have thought twice about charging you a high price during the boom, because the market would have allowed them to. Now the market works in our favour. A pendulum swings both ways.

Consumers now have real power when it comes to retaining professional services of all shapes and sizes. Let's use that power, to demand higher quality, as well as lower prices. Let's see how far that envelope can be pushed. The cheapest guy is not always the most shoddy, and the most expensive guy is not always the best quality.

The profitability of those professionals is their responsibility, not ours.
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  #2  
Old 07-01-2011, 11:26 AM
MrMan MrMan is offline
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There is some merit in what you say, but also while professionals try to justify maintaining high prices with spin as you say yourself the same is also true of consumers.
The spin on the other side of the coin is that, the cheaper guy is just being more competitive with his prices because he has just worked on tighter margins more in line with market realities. It would benefit readers to acknowledge that if a price is unbelievably in your favour then shortcuts are inevitably taken. Initially when there is a downturn in business then prices drop and quality is maintained in order to survive. When your prices drop to the extent that business is unsustainable then short-cuts are taken and basically anything is done to survive.
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  #3  
Old 07-01-2011, 11:52 AM
Firefly Firefly is offline
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Quote:
Originally Posted by MrMan View Post
Initially when there is a downturn in business then prices drop and quality is maintained in order to survive. When your prices drop to the extent that business is unsustainable then short-cuts are taken and basically anything is done to survive.
I think this would assume that there are other opportunities for increasing your income, such as doing different types of work. However, if there is nothing out there, then perhaps unemployed architects (with no overheads and plenty free time) will drop down to what established practices deem as too low in order to get some money in the door. I think this will only go on for so long though...unemployed architects will either have to emigrate or re-train into something else. Those with top experience, references and deep pockets should be able to ride it out.
Finally, personally speaking as a future client of an architect, I certainly won't be looking for the cheapest quote, if you can afford to build it IMO (and build it well), you can afford to get the best people involved in building it.
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Old 07-01-2011, 01:04 PM
MrMan MrMan is offline
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Originally Posted by Firefly View Post
I think this would assume that there are other opportunities for increasing your income, such as doing different types of work. However, if there is nothing out there, then perhaps unemployed architects (with no overheads and plenty free time) will drop down to what established practices deem as too low in order to get some money in the door. I think this will only go on for so long though...unemployed architects will either have to emigrate or re-train into something else. Those with top experience, references and deep pockets should be able to ride it out.
Finally, personally speaking as a future client of an architect, I certainly won't be looking for the cheapest quote, if you can afford to build it IMO (and build it well), you can afford to get the best people involved in building it.
No overheads would assume no insurance, and no tax, so then we are choosing the black economy.
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  #5  
Old 07-01-2011, 01:39 PM
RIAD_BSC RIAD_BSC is offline
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The most expensive isn't always the best, either. If some architect with no work on takes on your project for a song to generate cashflow, who's to say they won't give it just as much attention as Mr Big Swinging Architect who still parties like it's 2006? They'll have nowt else to do.

As for the black economy, that's a convenient old red herring. It is perfectly legal to pay someone cash for a job - it is the state's legal tender. Paying tax out of that cash is the architect's responsibility. This one can't be pinned on consumers.

Some members of the architectural profession need to wake up. Others have woken up already, which is why they've slashed their prices, their cost bases and their expectations for a standard of living.

Consumers still win out, and that's a good thing, unless you're an architect.
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  #6  
Old 07-01-2011, 01:47 PM
Firefly Firefly is offline
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Originally Posted by MrMan View Post
No overheads would assume no insurance, and no tax, so then we are choosing the black economy.
I agree. I don't condone it esp for something as important as your house design, but it must be happening all the same.
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Old 07-01-2011, 02:26 PM
Staples Staples is offline
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Originally Posted by MrMan View Post
No overheads would assume no insurance, and no tax, so then we are choosing the black economy.
It wouldn't necessarily assume no tax. All unemployed people are entitled to work casually as long as they inform the welfare authorities who will deduct payment in respect of the days worked. All such income is also subject to tax.

An architect has the same tax obligations regardless of whether he's running a thriving business or working on a piecemeal basis out of his boxroom. Whether they choose to comply is a matter between them and Revenue.
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Old 07-01-2011, 03:53 PM
MrMan MrMan is offline
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Originally Posted by RIAD_BSC View Post
The most expensive isn't always the best, either. If some architect with no work on takes on your project for a song to generate cashflow, who's to say they won't give it just as much attention as Mr Big Swinging Architect who still parties like it's 2006? They'll have nowt else to do.

As for the black economy, that's a convenient old red herring. It is perfectly legal to pay someone cash for a job - it is the state's legal tender. Paying tax out of that cash is the architect's responsibility. This one can't be pinned on consumers.

Some members of the architectural profession need to wake up. Others have woken up already, which is why they've slashed their prices, their cost bases and their expectations for a standard of living.

Consumers still win out, and that's a good thing, unless you're an architect.
The most expensive isn't neccessarily the best as you say and I have already agreed with you on this, it's just that consumers like to make themselves feel better by spinning the old' sure its a buyers market' when hunting down the cheapest (not neccessaril;y best value) end price.

The black economy is far from a red herring, it is most definitely a factor and it does affect society. I'm not preaching, i'm just accepting that if I look for a cash job then I'm basically opening the door for a cheaper price for me and tax dodging for the guy employed. To simply say that paying tax is the other persons problem is to make oneself feel better about it. If you look for a 'cash price' you are looking after no.1
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  #9  
Old 07-01-2011, 04:00 PM
MrMan MrMan is offline
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Originally Posted by Staples View Post
It wouldn't necessarily assume no tax. All unemployed people are entitled to work casually as long as they inform the welfare authorities who will deduct payment in respect of the days worked. All such income is also subject to tax.

An architect has the same tax obligations regardless of whether he's running a thriving business or working on a piecemeal basis out of his boxroom. Whether they choose to comply is a matter between them and Revenue.
In fairness assumptions aren't black and white, there are just best guess scenarios and if an out of work professional is offering to do a job way below employed competitors, my best guess is that it is for cash in hand.
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  #10  
Old 07-01-2011, 04:17 PM
Firefly Firefly is offline
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Originally Posted by MrMan View Post
To simply say that paying tax is the other persons problem is to make oneself feel better about it. If you look for a 'cash price' you are looking after no.1
And you're participating in the Black Economy...you're just not legally at fault.
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  #11  
Old 07-01-2011, 04:21 PM
Staples Staples is offline
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To simply say that paying tax is the other persons problem is to make oneself feel better about it. If you look for a 'cash price' you are looking after no.1
What if you simply ask for a "price" and pay what's asked? Are you still obliged to lay awake at night wondering if the amount was declared for tax?
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  #12  
Old 07-01-2011, 04:31 PM
Firefly Firefly is offline
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What if you simply ask for a "price" and pay what's asked? Are you still obliged to lay awake at night wondering if the amount was declared for tax?
No problem asking for a price or even paying in cash. If you're worried about whether or not you're participating in the black economy, best to ask for a receipt for the work done. If it's a "cash price" you won't get one!
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  #13  
Old 07-01-2011, 05:28 PM
RIAD_BSC RIAD_BSC is offline
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Does anyone here know roughly how much a sole trading architect might have to pay annually in liability insurance? Or can they purchase insurance by the project?
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  #14  
Old 07-01-2011, 06:11 PM
mf1 mf1 is offline
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Can we try and look at this in a wider context?

I'm a solicitor so I am very well aware of the issues of pricing a professional service. Before any professional person ( and by professional I am largely focussing on the issues of compliance with accepted standards, payment of professional indemnity insurance, payment of taxes, and general office management with a view to staying in business to provide the ongoing professional back up that goes with a professional service) takes on any client, they will be indebted to their professional body, their insurer, their staff if they have any and the Revenue. So there will always be a basic costs foundation upon which their fees will be constructed.

From my own perspective, there is a fee floor below which I am subsidising a client and running at a significant loss. That makes no commercial sense and increases the risk, if I chose to cost my services below that floor, that I will not be around to assist a client with ongoing issues.

I think the biggest issues I see with what I call below cost selling are

1. The devaluation of the professional service offered - oh, I can get it done for half that. It happens every day to me- and the answer - go get it. But don't be hoping that I will match that price because I won't.
2. The risk that we ruin an entire profession so that it becomes an unattractive option for students
3. And we don't have providers for that service.

As regards architects, I am horrified by many of the posters on this board who seek professional guidance for "takeaway" prices. I call it the "I want it cheap, I want it now, and I also want the full (value) indemnity when or if it hits the fan" mentality.

I personally want to deal with my professional advisors ( be they accountants, tax advisors, architects , engineers , professional witnesses etc.,etc ) for consistency and on a decent price for a decent job. I rely heavily on personal recommendations and won't go on a price only.

If it looks too good to be true..........

This is a perennial issue - it goes around and around. In good times and in bad.

mf
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Old 07-01-2011, 07:06 PM
Vanilla Vanilla is offline
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Great post by mf1.

As a solicitor too, I can see how a cheap service may not always be the best service. I see this every day in practice. Sometimes I am baffled and horrified by the poor service provided by other professionals. Now a high price is not an indicator of a good service- but a low price can be a warning sign. That is because if one professonal offers a service at an unusually low price they could be cutting corners to do this.

The problem with profesional services is that it is very difficult for the average client to know if they are getting a good service or not because there is a field of expertise involved. Sometimes it is only years later that a client will see how they have benefited, perhaps with contrasting poor advice or service.

My father recently discussed a bill with me that he had recieved from an accountant- the bill was around 15,000- I told him the advice he had recieved was invaluable and I will be making referrals to that accountant- he was excellent.


Like mf1, I would be a big advocate of personal recommendation when it comes to choosing a service. I'm happy to live and die by my reputation, so should others be.
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Old 07-01-2011, 07:57 PM
RIAD_BSC RIAD_BSC is offline
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mf1 and Vanilla - if I was a solicitor like both of you, I might have the same idea. And if a professional of any hue can charge above the market rate and stay in business, then best of luck to them. Charge as high as the market will bear, I say.

My beef is that some architects and other professionals complain that the market rate is unfair, and encourage consumers on AAM and elsewhere to pay above this. That is bad advice, and also biased advice. The market rate has nothing to do with unfairness. That's like complaining the weather is unfair. It is pointless. It just is the way it is. Nobody has a right to stay in business.

Markets rates only ever go below cost when there are too many providers. When this happens, the worst providers are driven out of business, and prices stabilise. This is what must happen to architecture and many other professional services. There are just way too many architects/photographers/heck, even lawyers (barristers at any rate.... i am not sure the same applies to solicitors - mf1?). The low rates will clear

mf1 - you have a fair point re fixed costs for a business such as a solicitor's practice, and fixed costs must be met. If you can cover your cost base and make a profit, then you should never sell below cost. If you can afford to tell customers to go elsewhere, then good for you.

But what if you can't? Many architects cannot afford to tell customers to go elsewhere. If they do, they'll have no work. They'll have high prices, and no turnover. In that situation, there is a logical commercial decision to be taken - you take the decision (once you have axed your cost base to the bone) to below-cost sell for a period to bring in cash through the business.

It is perfectly logical. Businesses don't survive on profits, they survive on cashflow. You can be profitable and still go bust if you don't have cashflow. If you have sufficient cashflow, even if you are unprofitable, you will survive for a period. That's what many of these cheap architects are trying to do.
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  #17  
Old 07-01-2011, 09:55 PM
Staples Staples is offline
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Quote:
Originally Posted by mf1 View Post
I think the biggest issues I see with what I call below cost selling are

2. The risk that we ruin an entire profession so that it becomes an unattractive option for students
Ah come off it. Professionals acting in the interest of potential competition?

The reality is that there is restricted entry to most professional bodies as a means of controlling supply. Even the leaving cert points system flucutates in response to numbers seeking entry to in any given year. It's not a quality control thing - it's a numbers game.

I'd agree that a low price isn't everything but it's consideration. The best electrician I ever used was also the cheapest while some of the young turks who characterised the Celtic years charged high and were bad to the point of being dangerous.

On the other hand, the best solicitor I know is almost one of the most expensive but he's not the best BECAUSE he's expensive.
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Old 08-01-2011, 10:14 AM
MrMan MrMan is offline
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Originally Posted by Staples View Post
What if you simply ask for a "price" and pay what's asked? Are you still obliged to lay awake at night wondering if the amount was declared for tax?
You are not obliged to do anything, I'm just hoping that people can use common sense and realise that when they whine about the waste of taxes by govt etc, that they understand that their argument rings a little hollow as they like most people tend to suit themselves.
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Old 08-01-2011, 10:16 AM
MrMan MrMan is offline
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Originally Posted by RIAD_BSC View Post
mf1 and Vanilla - if I was a solicitor like both of you, I might have the same idea. And if a professional of any hue can charge above the market rate and stay in business, then best of luck to them. Charge as high as the market will bear, I say.

My beef is that some architects and other professionals complain that the market rate is unfair, and encourage consumers on AAM and elsewhere to pay above this. That is bad advice, and also biased advice. The market rate has nothing to do with unfairness. That's like complaining the weather is unfair. It is pointless. It just is the way it is. Nobody has a right to stay in business.
I think the beef is that what you consider to be the market rate is just the lowest price available. Anything above that price is not 'above market rates' because you need to consider the level of service and as mf1 has said the level of back up service provided.
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  #20  
Old 08-01-2011, 12:15 PM
Lak Lak is offline
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I have worked with architects who produce excellent detailed drawings, with full specification and make regular site visits to ensure all works are compliant, in so far as there are no independant building inspectorate in Ireland.
On the other hand I have worked with Architects who proffer plans that could have been bettered by a 15 year old in technical drawing class, devoid of any spec, that look like they have been knocked up on a free version of Google Sketch on sheets of A4 with one site visit on commencement and a second on signing of for completion, and this is during the boom years.
The latter over the former wil be far more prevalent when choosing an Architect if your criterea for hiring starts with price alone, its blindingly obvious.
This is true of the Architect, the Blocklayer, the plasterer.... they need to make money but the client wants the best service for breadline payments, so the employed individual is clearly not going to give the level of excellence if his wage is poor, The blocklayer for example who might lay 300 a day if being paid well for it will now lay 500 if the prices are slashed in half, what suffers...quality.
Of course those paying the slashed costs are the ones who scream the loudest about the level of service they receive in very selective statements of fact.
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