Professional Practice 3 (mwf 9:30-10:30)

Laroa, Nathaniel
Taghoy, jerzey mae
Ar. dinglasa

CHAPTER 1
ORGANIZATIONAL DELIVER

Application of the business and tools of architecture centers in

the professional organization
Operations are affected both external and internal influences.
Ever-changing methods of project deliveries results to the firms
organizational response
Internal design delivery should be planned and administered
Same degree of care given to the clients requirements

BUSINESS MANAGEMENT

Lack of objectivity to business planning is a major concern to

architects
Proficiency is needed both as professional designers and
professional managers
Architects must earn the right to survive.

MANAGEMENT AND PRODUCTION TOOLS

Advanced techniques require advanced tools

Bird dogging and billing cycles activities that benefits from
creative networking
Office machines and computers increases administrative efficiency
Architect is a primary user and primary supplier
CHAPTER 2

PROFESSIONAL SERVICES

Architect must shape the scope and services to match clients

projects
Types of professional services to be provided become increasingly
more varied and comprehensive
Traditional services may no longer to present-day demands

TRADITIONAL APPROACH

Standard Form of Agreement Between Owner and Architect,

AIA document separate services to owners expected stated
compensation from those additional services that would have to
be paid
Well and wide accepted method
Formed as he basis for legal decisions and traditional methods of
compensation

NON-TRADITIONAL APPROACH

Broadens the scope of services and redefine the method for

contracting for services

Differentiation between basic and additional services is avoided

Advantages

Provides shopping list outlines all the possible services to be

performed
Educates owner of what an architect really does and what can be
done
Affords flexibility
Retains traditional role of the architect
Easily accommodates to a project in partial services or typical
required
Offers equitable basis for determining compensation for the
architects services
Opposite approach among some firms toward the development of
specialties
Concentrates on one particular building thus, becoming
specialists in the filed

FORMS OF ORGANIZATION

Careful study must go into any decision regarding multiple

organizations
Field of architecture broadening, for forms of organization to
become more complex

Direct or Group Ownership?

Whether choosing to practice alone or establishing partnership or a
corporation a number of considerations should be acknowledged such as:

GOALS.

The motivating force for any job or task is having a goal. An architect might
want to excel in smaller projects thus he employs a sole proprietorship.
However, within a partnership or corporation, it allows the company to
explore and expand their expertise.

Personality

Different types of people entails different kinds of personalities. A person

might have excellent leadership skills, while the other is an introvert. This no
longer poses as a problem because of the diversity of jobs within an
architectural office. These personalities will fit to their designated
assignments and work together to create a cohesive firm.

Financial aspects

Shared ownership of a firm establishes acquisition of additional capital for

the operation of the firm, thus resulting towards possibilities of expansion.
While during bad times, this shared ownership becomes a necessary
stronghold for the survival of the firm.

Age

Age becomes a vital factor in the later years of an architects profession.

Along with age comes experience. Experience draws in clients and it makes
them think of an architects excellent expertise that he has gathered
throughout the years. In comparison, a sole proprietorship vests its essence
on one individual thus the firm of the value to others becomes questionable.

Firm size

Firm size may incur effects to decisions regarding organizational form. At

one point only large firms incorporated. However, there are exceptions like
skidmore, owings & merill, one of the largest firms, with offices in more than
6 cities, which continues to choose partnership.

Practice mix

Firms offer the type of services which is dependent on the capabilities of its
principals. For instance, if the firm provides architecture and engineering
services, then it may be best to match the principals to the capabilities
required. Likewise, if a firm engages a specific area of practice, such as health
care facilities, then it might be wise to employ experts in these fields as part
of the ownership team.

Geographic location

Choosing a firms form or organization may be because of the choice of the

firms location. If there is an aspiration to have a multi office operation in
various locations, it might be helpful to employ at least one principal to
manage each office. This ensures greater productivity and efficiency in order
for it to be easy in developing new business.

Partnership or corporation?
Doubt arises when unclear future possibilities meddle with a firms
structured plans. Whether to engage in partnership or corporation requires
a great amount of thinking. There should be careful scrutiny among
individual requirements for employing with a corporation or partnership
might not always be clearly positive. The firm contemplative of this dilemma
should seek aid from competent, unbiased and legal financial advisers.
In some cases, architects may be able to practice as a general business
corporation and some operate as a professional corporation. The main
difference lies on the allowable makeup of the shareholders, where only
licensed professionals hold stock. This restriction may not be severe to
firms which are contemplating to shift from a partnership to a corporation
until the realization dawns that values persons such as business managers
or other capable professionals, who might be valuable assets would not be
eligible to be part of the ownership of the firm.
The pros and cons of establishing a professional corporation considers the
following:

Financial advantages to the principals

Electing professionals to incorporate as opposed to partnership creates

more benefits because of the corporations ability to provide, under current

law several forms of protection while enjoying tax deductions. When

accidents occureven accidents leading to deathInsurance can survivors
and the estate. The corporation pays the cost of these benefits and
deductible to it would be free of income tax to the professional. This
circumstance wouldnt be applicable in a partnership.
It might appear that a corporate practice is more favorable than a
partnership. However, there are still several considerations that must be
taken into account by the principals. First, principals who contributes to a
corporate pension must give up some spendable income, and not many
individuals are willing to sacrifice this reduced current income for longterm benefits. Likewise, all regular employees of the firm must be included in
these plans. Architectural firms usually has a high ratio of employees to
principals, the cost can be quite extensive.
Retirement plans are also available for sole proprietors and anyone owning
more than 10% of a business. In addition, any employee of a corporation or a
partnership where no retirement plan exists, one can start an individual
retirement plan. One of the advantages of these plans is the postponement
of income tax.

Perpetuating the firm

Another advantage of incorporation is that it is an effective way of

maintaining or preserving the firm. Younger principals can buy out the stock
of retiring principals so that each senior owner will be taxed on its
appreciation in value as capital gains. In addition, it is also possible for the
corporation to take out life insurance as its own expense to provide cash to
purchase a deceased principals stock.

Professional concerns

Some concerns arise, some of which is that some architects raised their
concerns and objected to the corporate form of practice because of they
believed that the image of a personal service profession would be tarnished.
However, with the current growing number of professional corporations,
no effect has become evident.

Potential disadvantages of incorporating

1. Compensation to officers of the corporation are given and fixed at
what the Internal revenue service considers reasonable
2. Many legal requirements are needed for an incorporation, thus its
costs are much higher than forming a partnership.
3. Corporations become questionable if they accommodate too much
income without a penalty. Meanwhile, partnerships treat income as
thought it had actually been distributed to the partners, no taxfree accumulation in partnership is possible.
4. Corporations pay taxes on income in addition to the personal
income taxes which their employees and stockholders pay on
salaries and dividends, partnerships are not subjected to this dual
taxation.

Other organizational structures

In addition to the three basic forms of organization, there are variations
which may be utilized.
1. Joint ventures
This is composed of temporary associations of two or more firms formed
for the purpose of providing services on a specific project. These firms may
be in any of the three organizational forms, but their combination is
considered similar to a partnership.
This is useful for firms who desires to handle projects than what itself can
produce, working in an alien field of practice or expertise in a remote
location. The venture is formed using the joint venture agreement. Once the
project is over, the venture firm is dissolved
2. Associated professional firms
There may be some cases wherein several firms of varying disciplines or
expertise associate to develop new business together. And if successful,
these firms join in providing a continuation of services. Their association
starts with a loose arrangement which later on becomes formal into a joint
venture for a specific project.
3. Mergers and acquisitions
The advantages of a merger includes benefits such as broadening technical
services, acquiring better management techniques, expanding markets and
gaining financial security, thus creating it sought-after by firms. However
nonprofessional ownership creates greatest hazards to the professional
firm in such ways that it creates loss of independence, undue emphasis on
profit, less professional objectivity and possible future conflict of interest.
Typical problems of mixed mergers also deals with the language barrier.no
matter the what type or kind of merger or acquisition, it is still wise to
secure the best professional advice in order to have all questions answered
before the merger takes place.
4. Team endeavors
The diversified practice of architecture enables it to mingle with other
professions in projects. In order to render exemplary service, the architect
must develop a firm relationship based on delineation of the various
participants of the project. This relationship must be written in a form of
agreement that all parties concede to their individual and collective
responsibilities.
Registration laws should be strictly followed by having adequate
knowledge about the requirements. It must be fairly understood by everyone
that an architects sealwhich is attached to drawingscarry such
responsibility and the entire team should realize this.

5. Branch officers
It isnt unusual for firms to expand outside their area of service. Often this
involves establishing offices in different parts of the country or overseas.
Proper management control then becomes a necessity for business and

quality aspects of the firms service. Does the firm produce the same design
quality as of the parent firm? Does the need of duplicating various disciplines
and administrative office function necessary as opposed to providing
central services?
6. Public ownership
Few architectural firms have offered shares for sale to the public. Some
advantage of going public are the following:
o

o
o

o
o

Capital base expands and increases the firms financial resources

to have chances of expansion, development and to acquire other
firms.
A method is provided to capitalize on a firms reputation and
goodwill.
Supplementary compensation is available through stock option
plans so that ownership can spread, thus providing better
employee incentive.
Continuity of control can be maintained when the principal
retains a majority ownership in the corporate stock.
Public scrutiny tends to promote greater efficiency.

However, some disadvantages also exist and includes the following:

o
o
o

High cost maintenance of the firms records and its

reorganization.
Difficulty exists in establishing a broad market for the stock.
Constant pressure mounts to show good earnings, which may
affect the firms professional practice.

7. Combination of forms
Many firms had discovered that combining several forms of organization
best serves their purpose and benefits them. An example would be a
partnership with an incorporated drafting room. The professional services
partnership is maintained for personal client relationships while the
production arms is a corporation. Another example is the establishment of
separate corporations to provide construction phase services, interior
design services or construction management. Careful and rational
decisions must first be formulated regarding multiple organizations.
However, the trend is leaning towards this type for the field of architecture
is continually broadening and becoming more complex.

Comparison of forms of organization

Proprietorship

Usual firm size

Partnership

Professional
corporation

Business
corporation

Small to

Medium to

Medium to

large

large

large

all

all

Virtually all*

some

maximum

varies

varies

varies

maximum

shared

Usually
minimum

minimum

maximum

Maximum but
subject to
contribution

Slightly

Slightly

reduced

reduced

minimum

minimum

maximum

Maximum

Usually minimum

varies

maximum

maximum

Generally small

States which
permit this
form of
practice
Personal
involvement
of principal
Extent of
personal
liability
(business)
Extent of
personal
liability
(professional)
Potential
personal tax
advantage for
principals
potential
benefits for
employees

* State laws vary, some providing for professional associations.

Internal office structure

Sources of the diversity of architecture are sourced from the varied
challenges in response to the variety of owners needs. Organizations
develop solutions from these needs. Major trends which have appeared in
recent years are discussed consequently.
In-house disciplines or consultants?
First step for decision-making in every firms is to decide which disciplines or
specialties it wants to maintain for in-house services and which will be
covered by the consultants. The number of disciplines is extensive and seems
to be expanding further every day. Which disciplines should be represented
as employees of the firm as consultants, as joint ventures?
Most of the consultants each have their own area of expertise used rarely
or only when certain projects arise), no architectural firm will hold all.
Thus, the first basic decision is whether to employ on staff, the most usual
consultants: the structural and mechanical-electrical engineers. Each

firms must assess its own situation. Some considerations for decision making
are the following:

Firm size

For small firms starting out, it is usually best to hire engineers as

consultants so as to cut down on payroll, overhead expenses and liability.
This move permits small companies to accept projects without worrying
whether it can accommodate such or not. With the use of consultants, there
would be immediate expertise on a specific area when needed and no
obligations when not.
Medium and large firm decisions doesnt base on simple considerations, and
factors other than size should be carefully scrutinized.

Practice mix

To have all the necessary disciplines available in the office is often very
helpful especially if a firm specializes. This should balance the workload and
maintain flexibility. However, it might become a chore to maintain and keep
everyone busy.

Geographic location

If common practice in the geographic location is to have a combined

architectural-engineering services, it becomes hard to compete with other
firms without employing engineers of ones own firm. It also becomes
difficult to hire engineers when most of the firms in the area also employs
engineers. It also becomes hard to find competent engineers because of the
lack of available opportunities.

Other criteria
o How best will the architect serve the client?
o Is the architect willing to share the compensation with some
consulting firm?
o Can the architect coordinate the work as closely and as well
with a consultant as with an in-house staff? Will clients have
the same opinion?
o Is the architect willing to assume all the professional liability
for both architecture and engineering or prefer to see it shared?
o Does a professional stagnation take place when consultants
on the staff respond to only one architects work, rather than
having to remain competitively sharp in order to get work from
many different officers?
o Can the architect offer the services of the in-house engineering
staff to other architectural firms and thereby gain additional
income?
o Can the architect finance the combined operation?

Types of internal office organization

When the firm decided on the type of service which it will provide, it is
important to determine how the firm will be organized internally.
First, it is important to talk about management. Some archite8cts often feel
immune from the business aspects of the office, a well-managed firm avoids
experiencing diminishing of profit and services. Under these conditions, the

architect becomes inefficient in meeting the clients needs. To remedy this

concern, many firms hire professional managers as an integral part of their
staffs. Managers attend to the business and organizational matter of the
practice while architects focus on the professional activities.
There are 2 primary divisions of responsibility of firms: administrative and
technical. The administrative area includes accounting, financing,
marketing, purchasing, contract management, and personnel management
and consultants coordination. These functions are supervised in a variety
of ways. Some firms appoint principals with the responsibility of some or all
of these aspects. Other firms do it by committee, established to meet
periodically for reviewing and setting policy for the particular areas under
consideration.

Partial list of consultants

List of consultants who may be employed by architectural firms:
Acoustics

Interior design

Audiovisual equipment

Landscape architecture

Behavioral sciences

Life cycle analysis

Building types

Lighting

Civil engineering

Mechanical engineering

Codes and regulations

Mechanization systems

Color

Models

Communications

Photography

Computers

Planning

Construction costs

Process engineering

Conveying systems

Real estate

Development building

Renderings

Economics

Research

Electrical engineering

Scheduling

Energy conservation

Soils engineering

Environment

Space planning

Facilities programming

Special equipment

Financing

Structural engineering

Fine arts and crafts

Surveys

Fire protection

Traffic engineering

Food service

Value analysis

Graphics

Many forms of organization are in the technical area. This aspects vitality
entails the firms survival and growth. Despite the exemplary services
rendered by the internal administration, the firms future will be ambiguous
if the resultant professional services are not of high quality.
Departmental organization
There is separation of the various functions that is performed by a firm. Thus,
emerge a design department, a construction documents department, and a
construction administration department. Each is headed by a person in
charge which is usually a principal. Often, each department is assigned a

budget for the particular project and is required to stay within its
designated portion of the overall budget.
An advantage of this system is that personnel can be chosen according to
what areas which they are most competent in so that they can exert utmost
focus and effort on their designated task. This way, the department head can
keep a close eye over their respective operations in order to maintain
exemplary performance of each department. This system is often used in
large firms which can afford to hire employees with specialties. With the
combination of these specialists, there might be problems on keeping these
people with constant work for them to stay productive. A nondepartmental
organization might provide a better solution for this.

MANAGING Principal

New business
development

Office
administration

Principal-in-charge

Principal-in-charge

Principal-in-charge

Design department

Construction
documents
department

Construction
administration
department

designers
draftsmen
model makers
renderers

designers
specifiers
estimators

Construction
administrators
Shop drawing
checkers
On site
personnel

FLOW OF PROJECT
DEVELOPMENT

Nondepartmental organization
As a response for the human need for a project with identity, different forms
of organizations has resulted in some architects office. In the beginning, a
team is created to develop a project. The team leader chooses people with
varied skills to turn out the work. The main team members are the leader and
the designersometimes could be the same personstay with the project
from the inception stage to the conclusion stage. The team expands with
team members as the project progresses.

However, this organization brings up some problems. Factors such as

control and maintenance of a uniform level of service are some of the
problems which arise. In an attempt to deal with these complications, there
are also variations in the structure which may be used.

MANAGING Principal

New business
development

PROJECT
PRINCIPAL

Office
administration

PROJECT
PRINCIPAL

PROJECT
PRINCIPAL

PROJECT A
TEAMLEADER

PROJECT b
TEAMLEADER

PROJECT c
TEAMLEADER

PROJECT f
TEAMLEADER

-DESIGNERS
-DRAFTSMEN
-SPECIFIERS
-ESTIMATES
-construction
administrators
-full-time
project
representative
-other
required
personnel

PROJECT b TEAM

PROJECT c TEAM

PROJECT f TEAM

Note: on certain
projects, the
project principals
the team leader to
whom the team
reports directly.

PROJECT d
TEAMLEADER

PROJECT e
TEAMLEADER

PROJECT d TEAM

PROJECT e TEAM

Flow of
project
develop
ment

Modified team organization

This is a combination of departmental and nondepartmental systems which
is often used in larger offices, preferring to use a form of the team system
because it answers desires for continuity and identity. But in order to
maintain a certain uniformity of services and to assure that some teams are
not loaded with skilled people at the expense of others, they maintain a
modified form of structure where the team leader is assigned personnel
from each department. Even when assigned to the team, various functions
are measured for conformity and completeness by the department head.
Problem arises when there is conflict between the team leader and the
department head. In this combined form of organization, the project teams
are centrally administered and serviced.

MANAGING Principal

New business
development

Office
administration

Principal-incharge

Principal-incharge

Principal-incharge

Design
department

Construction
documents
department

Construction
administration
department

-designers
-draftsmen
-model makers
-renderers

-draftsmen
-specifiers
-estimators

Team leader

Team a

-designers
-draftsmen
-model makers
-renderers

Team leader

Team b

Team c

Principal-incharge

Team leader

Team d

Team e

Team leader

Team f

Team h

Team g

Personnel assigned by
departments to teams

Flow of
project
develop
ment

Modified departmental organization

On the basis that the construction documents phase of practice is the one
which most benefits from a departmental approach, some offices with
remote branches organize their practice to capitalize on this advantage.
They permit their branch offices to carry projects through the schematic
and design development phases. When this work has been approved, the main
office will then turn out the working drawings and specifications. The same
office may also provide a reservoir of additional specialists for the
branches.

Modular organizations
Another form which has become a method of operation within the very large
firm is to divide the firm into modules, each run by one or several principals
and each serving has a separate profit center. These modules may be based on
the different areas of practice such as health care facilities group,
educational group, etc.
A firm has a free choice on whatever organization it wishes to adapt as long
as clear definition of the structure and responsibility is recognized. There is
nothing more unnerving than an employee to be left floundering without an
understanding of what is required and whom to report. For every
professional services firm, these essential goals should always be kept in
mind:

Produce the best architectural results

Achieve the best response to the clients needs
Make the most money
Avoid legal complications

MANAGING Principal

New business
development

PROJECT
PRINCIPAL
module 2

PROJECT
PRINCIPAL
Module 1

PROJECT
TEAM

PROJECT
TEAM

Office
administration

PROJECT
TEAM

Design
department

PROJECT
PRINCIPAL
module 3

Construction
documents
department

Note: the system

organization within the
module may vary
departmental or nondepartmental or a
combination of both.

Flow of
project
develop
ment

Flow of project
development

Construction
administration
department