A national survey of 169 architecture firms has highlighted unanimous concerns around securing future projects amid rising construction costs, interest rates and living expenses, compounded by stringent budgets and regulatory limitations.
The Australian Architectural Billings Index, conducted by architecture marketing agency Office D.Sharp, is a new quarterly report that compiles practices’ financial insights, commentary and their expectations for the months ahead. The report takes its cues from the eponymous monthly report from the American Institute of Architects, published since 1995.
The inaugural report, released publicly in August 2024, captured financial data between the beginning of April and the end of June 2024. Among the key findings, firms shared similar sentiments on securing their future project pipeline despite experiencing nuanced state and territory growth patterns.
Overall, most practices reported a growth in billings (43 percent of practices reporting an increase and 29 percent reporting a decrease compared to the previous quarter). While a positive trend, this statistic could also reflect the widespread status of business cash flow conditions, with more projects potentially in documentation or on site rather than in early feasibility, concept and sketch design stages. As one architect commented, “We […] have projects underway which have carried us through so far but they are coming to an end.” Another noted that “enquiries increased but lots of people won’t sign fee proposals due to uncertainty.”
Contributing at least in part to project programming difficulties, many architects voiced their concerns toward increasing regulatory red tape and delays. One architect observed that “it has become much more arduous to get through each statutory process. Municipalities and building surveyors are asking so much more of architects in terms of documentation and administration. Planning and building permits were much easier to obtain in the not-too-distant past. This has had a significant impact on profitability because we haven’t been able to adjust our fees as quickly as this change has occurred.”
The downturn in firms’ prospective projects was evident across the board, with enquiries being less in both number and quality (44 percent of practices reporting a decrease in volume and 39 percent reporting a decline in quality). One respondent attributed this concern to an imbalance in costs and expectations, noting that “clients budgets aren’t increasing but cost of construction is. We’re getting the same briefs and budgets but less ability to achieve what they want.” Another architect attributed the decline in project quality to smaller budgets and clients’ desires to downscale or stage works.
Notwithstanding these shared sentiments, the report captured varying growth patterns and attitudes toward hiring that appeared contingent on both locale and practice size. In comparison to Victoria, New South Wales and South Australia, who generally reported less appetite to hire, business conditions appeared stronger in Queensland and thriving in Western Australia. The report also found that mid-size practices of around 11-25 people showed strongest billing growth (with 63 percent seeing an increase compared to the previous quarter) and while large practices faced a tough quarter (with only 18 percent percent reporting an increase in billing), most (64 percent) were optimistic and intending to hire into this quarter.
Founder of the Australian Architectural Billings Index Dave Sharp said he hoped the first report would prompt further data sharing and honest discussion around the challenges facing architectural businesses today and into the future.
View the full report online.
Source: Architecture - architectureau
