Some firms aren't sold on growth

Some firms aren't sold on growth

BY LUCY BODILLY
Special to the Journal

Architectural firms don't automatically expand during boom times for one simple reason. Architects would rather design buildings than corporate management structures.

Though the past few years offered opportunities for expansion, many local firms opted to remain in the same niche and geographic area. Even before the recent stock market jitters, some decided to downsize.

The reason most firms remain small is that the principals decide they want to stay in touch with their work and their clients, said Rena Klein, an architect and a management consultant.

They may also be resistant to being managers.

"They don't understand that they can design a company the way they design a building," said Klein, who recently completed a master of sciences program at Antioch University, Seattle, in part to pursue her interest in how architecture influences the workplace.

If a firm stays in a familiar niche it can take advantage of referrals.

But the economic risk of expansion, the loss of control over projects and the difficulty in finding qualified personnel are all good reasons not to expand, Klein said.

Dave Peterson, a principal of Broweleit Peterson, knows the reasons. His firm, which primarily designs churches and schools, once employed 58 people and now has 29. And even though the firm competes successfully in its markets and is seeking to hire another architect, he is looking for smaller space. He hopes to cut rent in half. And after expanding in the 1980s and receding in the early 90s - the principals of the firm decided not to chase after opportunities this go-round.

The current size makes sense, given Broweleit Peterson's markets.

"If I make a proposal in an unfamiliar school district, 40 other people will also submit proposals. If we get short listed we still only have a 25 percent chance of getting a job. I know if we make a proposal on a church project, we have an 80 percent chance of getting a job," Peterson said. Because of the company's long time involvement in church projects, it has a good reputation in that area. For schools, it prefers to stick to work in selected school districts.

"You may spend several years talking to a new school district before you get a job," said Andy Hall principal of Botesch Nash and Hall, whose firm works for several school districts and designs hospitals. Submitting proposals is expensive. On the other hand, if a firm stays in a familiar niche it can take advantage of referrals.

Then there are the rigors of designing a building that the architect may not necessarily be familiar with. "There is always a learning curve if you are new to the type of building," Peterson said. This can be especially costly on public projects, where contractors doing the work count on architectural errors and subsequent change orders for their profit. Since the firm shifted to negotiated work, profits have increased and stress levels decreased considerably.

If Peterson decides to remain in two niches, schools and churches, the only way he can expand is to move into other geographic areas. That means hiring a new architect who might be able to bring in work in another niche, or who has name familiarity in another geographic area.

Right now it is hard to find qualified people, Peterson said. He recently ran a help wanted ad for three weeks with no favorable responses. "Even if you do find the right person, there is no guarantee that they will be able to bring in the work," he said.

Hiring more people brings risk. All firms face the inevitable downturn in the economy - and the chore of laying off new hires.

Small firms know that even if they grow, the profit margin may not increase. But, according to Hall, some growth is necessary in order to serve clients well and give employees the opportunity to work on challenging projects.

Besides, small firms have another advantage. Hall, who also specializes in medical work, can always team up with a larger firm in order to tackle bigger projects. Currently he is working with NBBJ on a $30 million women's center at Providence Hospital in Everett.

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