The just-released AIA firm survey, The Business of Architecture, is essential reading for the profession’s observers because it is the most complete benchmarking of trends such as firm size, economy, project delivery methods, and many other practice concerns. But after reading the latest edition, one expert opined that it could also have been titled Business as Usual, because many long-standing trends changed so subtly in the three years since the last report that it is very hard to say whether those shifts indicate real changes or the temporary bumps and dips experienced by all professions. On the other hand, in the newest report, authors Kermit Baker, Hon. AIA, James Chu, and Jennifer Riskus have begun testing two of the most remarkable shifts in the profession’s behavior: the rapid adoption of green design and building information modeling (BIM). These weren’t even mentioned in the last survey, but they’ll only be gaining ground in the future.
No matter what you call the survey, it tells us that business is good. Firm billings increased 11 percent between 2002 and 2005, to reach $28.7 billion annually. That contrasts nicely with 2002, when nonresidential billings were hardly growing, and the profession was being carried by its residential work. The survey notes, “According to U.S. Department of Labor figures, payroll employment at architecture firms increased more than 2 percent in 2004, almost 4 percent in 2005, and is on pace to increase close to 5 percent in 2006.” In terms of proportion of firm activity within this growth profile, the residential sector has increased over 5.5 percent since the 2002 survey, to 17.7 percent of firm billings, and about 60 percent of that is in multifamily. Institutional still takes about 50 percent of the total share.
The big challenge for firms is recruiting appropriate talent to support all that growth, and finding and retaining the best people is clearly an ongoing strategic priority. This is also boosting wages. One short-term and perhaps less-than-ideal solution is outsourcing: Just over one third of firms outsource work frequently or when workloads are heavy. Only 8 percent of those firms say they send work offshore.

Firm matters

One interesting trend is that the number of sole practitioners declined 9 percent since 2002, while two-to-four-person firms increased by the same number, indicating perhaps that sole practitioners are partnering up. The report indicates that, “Architecture firms have remained predominantly smaller practices.… the percentage of firms with five or more employees remained fairly constant in recent years.” Moreover, small firms are still dominant, with 96 percent of all offices, yet large offices (50 or more employees) control almost 42 percent of all staff, and almost 52 percent of all billings. Predictably, the largest firms, according to the survey, also have much higher average net billing per employee—$143,000 in firms with 50 or more employees, while firms with fewer than 20 average $83,000. The survey implies that the larger firms’ investment in advanced technology allows their staff to be more productive, although it seems likely that many other factors influence these sums.

Sadly, women and minorities are still grossly underrepresented in firms, but there has been some incremental improvement. Women now compose 26 percent of all architecture staff; minorities, 16 percent. These numbers have been growing about 1 percent per year since 1999.