As the Practice Management Knowledge Community our Mission is to Advance the Practice of Architecture through discovering, generating, organizing, and sharing insights, resources, and tools that enable architects to practice more effectively.

Letter from the Editor
By Donald Simpson, AIA, LEED® AP

This Edition of the PM Digest focuses on issues related to Financial Management and covers topics ranging from initial contract negotiations to financial metrics to shareholder value. You can also find additional resources and get input from colleagues on our discussion forums. Links to those venues are provided under the Resources heading below. As we approach the end of one year and the beginning of another, my sincere hope is that your firm will have an increasing amount of finances to manage in the coming days.

If your car isn’t running right you call a mechanic, but what if your company breaks down? By inspecting key performance metrics that determine profitability and impact shareholder value you can steer your company to success. As a professional service firm, your success is driven by effective project management—which is driven by time and efficiency of labor and value pricing. This is the "rocket science" needed to understand how to connect the dots from day-to-day operations to building shareholder value and opportunity within your design firms. Continue Reading

A Public Agency's Contract Can Always Be Changed, Even in This Economy
By Michael Strogoff, FAIA

People who negotiate on behalf of public and municipal entities have insisted for decades that their standard contracts are not negotiable. By making statements such as “other architects and engineers have signed this,” “our city attorney won't agree to any changes in the body of the agreement” and “making any changes will delay this project and jeopardize our schedule,” representatives from school districts, colleges and universities, public and district hospitals, redevelopment agencies, utility districts, and state and local governments expect design professionals to acquiesce. Now, there’s an implicit understanding. “In this economy, no architect in their rightful mind is going to back out of a project no matter how onerous the terms.” Unfortunately, most architects either buy the party line that standard contracts are not negotiable or they are running so scared of losing yet another project they are willing to mortgage their future. Continue Reading

Standard of Care: Confronting the Errors-and-Omissions Taboo up Front
By Dale Munhall, AIA

When should the owner pay to fix imperfections in the design process?  When should the architect pay?  What is the difference between “errors” and “omissions”, and how can inconsistencies be resolved?  These age-old questions have a single, deceptively simple answer:  it depends—on the circumstances, on the contract and, perhaps most of all, on whether or not the Owner and Architect started out with shared expectations on the seemingly arcane subject of Standard of Care. Continue Reading

UN-Negotiation Way to Close Business
By David Zahn

Invariably as the sales cycle begins to wind down and a legitimate prospect starts to show interest in moving forward with a project, the inevitable happens. The client contact alerts you that they are in receipt of your proposal and pricing, but there are just a few things that they want to discuss with you before they can move forward (code words for: we want a better price). And so, a negotiation ensues where it is expected that the costs will come down and services will go up at the same time. It is at that time that the beads of sweat start to form as we fear that we may lose the deal if the right mix-and-match of price concessions and additional services is not offered. Continue Reading

The AIA’s Practice Management Knowledge Community has reorganized, culled, and expanded the online compendium of nearly 400 Best Practices, which now align with the 18 chapters of the Architect’s Handbook of Professional Practice. In each issue of the Practice Management Digest, we will feature a selection of new Best Practices, all of which can be reviewed at http://www.aia.org/practicing/bestpractices. Best Practices continue to evolve, and you can join the discussion as well as contribute your own by e-mailing pm@aia.org. Here are two of the newest new Best Practices.

The Value of Earned Value
By David B. Richards, AIA, LEED AP, PMP

Management leaders have said, “If you want to improve something, measure it.” One way to improve the financial performance of your projects is through measuring Earned Value. This new Best Practice, “The Value of Earned Value,” explores an approach to measuring earned value that has helped many project leaders improve their project’s financial performance. Continue Reading

Accounting Basics: The Income Statement & Key Performance Indicators
By Michael A. Webber

For an architecture firm to succeed as a practice, it has to be a successful and sustaining business. This new Best Practice, “Accounting Basics: The Income Statement and Key Performance Indicators” provides a concise and easy-to-understand summary of what makes a firm tick—financially—and those important gauges on the dashboard that firms should monitor. Continue Reading

2012 Webinar Subjects

• Financial Management
• Leadership Development
• Knowledge Management
• Negotiation Skills
• Diversity in Practice
• Firm Organizational Structure

2011 Webinar Archives

Visit the PMKC Webinar Resources page to view the calendar and the list of archived webinars.

Archived PM webinars are also available on the PM Youtube playlist.

The next Practice Management Digest Issue, to be published in the first quarter of 2012, will have the overall topic of Organizational Management. This include topics such as:

• Project management
• Quality management
• Risk management
• Knowledge / Innovation management
• Managing a small firm and managing a large firm.

If you wish to provide an article for consideration in the next PM Digest on one of the above topics, please contact the editor at dsimpson@kpsgroup.com for further information.

AIA Compensation Survey: Architect Compensation Stagnant
As viewed in AIArchitect

Plagued by a seemingly endless recession, architects are only making slightly more than they did three years ago.

While the past recession was severe across the broader U.S. economy, it has been devastating for the construction sector. Since the last AIA report in 2008 on compensation trends at architecture firms, construction activity has plummeted. The downturn in construction activity has affected those serving the industry, with architects particularly hard hit. Continue Reading

Best Practices continue to evolve, and you can contribute your own firm’s best practices by e-mailing bestpractices@aia.org. To learn more, visit www.aia.org/practicing/bestpractices.

AIA Practice Management Knowledge Community on KnowledgeNet

AIA Practice Management Knowledge Community Best Practices

AIA Practice Management Knowledge Community LinkedIn Group

AIA Practice Management Knowledge Community Facebook Page

AIA Center for Integrated Practice