From the Chairman: Welcome to the global marketplace

Mar 16, 2011

By Ed Friedrichs There is no “right” or “wrong” about where work gets done today. Work and ideas flow freely across the planet. The marketplace will buy from the source that provides the right service or product at the right price, no matter where it comes from. Consumers will only choose to pay more for benefits that are important to them and are becoming increasingly blind to the geographic source. American A/E firms have been outsourcing production work to India, China, and the Philippines for several years and the entities that they work with— whether they are service bureaus, partner firms or wholly owned foreign subsidiaries— are thought of and used primarily as low cost, back-office production staff. The work has been by and large an electronic extension of a U.S. team delivering service in the U.S. or elsewhere. As in the software industry, it’s been a quest for cheaper labor with comparable skills; and the skill levels today are at a pretty high standard in those three countries. This is still a small percentage of overall work produced by U.S. firms, though. Managing the client and contractor relationship work takes place close to the client and the construction site. As people in these three countries become increasingly skilled and knowledgeable about American design standards, technology, and practices, and as design talent evolves “at home,” we will see the emergence of Chinese, Indian and Philippine-based firms that can design as well as produce. What’s lacking? Only the skill, talent, and ability to provide a physical presence close to the project. We’re seeing Chinese firms with a full array of skills starting to do work in China (or India, or elsewhere in Asia) and I suspect we’ll see the same soon in India and eventually, the Philippines and elsewhere in Asia. They won’t need the Western brand and “Good Housekeeping Seal” for much longer. So, what’s next? Do these entities start to reverse the relationship, start to compete head-to-head with U.S. firms on our own turf, hiring American firms to represent them at the project locale? Do they acquire a small U.S. practice to do so? Or, do they simply set up their own wholly owned foreign subsidiary to round out their client management and service delivery capability? It’s coming and, I believe, this direction is going to evolve rapidly. Why not? There are lots of bright, highly energized and entrepreneurial folks there. I believe that over time, projects of significant scale will move toward global or most efficient/cost effective sourcing of work and talent, just like the software industries. While this is an interesting trend to consider, the more fascinating one is: How much conventional “production” work will be done in the future with the advent of BIM (Building Information Modeling) and IPD (Integrated Project Delivery)? These shifts in project information assembly and process are leading to more collaboration between the parties to construction (which are also becoming, if not yet global, certainly national). I think the nature of the entire AEC industry is at the beginning of a quantum shift in how work will be done. So the concern about whether Asian competitors, and any cost advantage to a firm outsourcing production work to Asia, might become irrelevant as the entire process of doing our work evolves. Architects’ and engineers’ roles are being recast as participants in a collaborative design/construct team through the migration of the construction process to BIM, a single, integrated project model co-created by the architect, engineers, the contractor, subcontractors, and suppliers. IPD eliminates discrete formal document issue packages (except, perhaps, to the building department, although online plan check or a move toward more self-certification due to constrained public budgets— they’ll collect the fee but won’t do the work), revising or obviating the documentation and delivery process described in AIA documents. This will force architects to redefine what their role is in the design and construction process. Where can they offer the highest value to their client, the contractor and all other parties to the construction process? How will an architect make the case for his or her relevance as part of the team? Will the architect be merely another vendor to the contractor, contributing design ideas only? Or will the architect be the leader and integrator, taking the client and project through the definition process from project inception to feasibility, defining how the project can enhance the client’s enterprise performance goals? Will the architect lead the engineering team to integrate architectural and engineering systems to find highest value in initial construction and on-going operating costs? Will the architect lead the project through the public approval processes, both discretionary and codified? Will the architect lead the project through commissioning and occupancy over time to assure that the value to the client is optimized? So, am I worried about a firm undercutting their competition’s fees by farming out construction documents to a Chinese, Indian or Philippine-based service bureau? I think not. In fact, I suspect that construction documents as we know them won’t be necessary in the very near future. What use are they today? Buildings are built from shop drawings and submittals already. On large, complex projects, contractors are building from elaborate 4-D sequencing documents that they prepare, not the architect’s construction set. The approved plan check prints are on the job site to satisfy the building inspector, not to build from. I have no preconceptions about whether architects will own contractors, contractors will own architects or whether we’ll have a long period of settling in through partnerships, joint ventures and alliances. I do know that that we’re going to have to do a lot of thinking and leading in the definition of how we as architects and engineers add value to the process, or we’re going to end up as another subcontractor to the GC.

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