Metrics of Value: Measuring How Design Adds Up

February 15, 2004 · by Scott Simpson, FAIA

Ambitious firms may claim all four as core values. The important point is that to be successful, your firm needs to be distinguished in some way. What makes it special? What drives the bus?

All firms, large or small, have principles by which they propose to operate. Some pride themselves on being design-driven. Others focus on client service. Still others on the quality of their technical documents or on being cost competitive. Ambitious firms may claim all four as core values.
The important point is that to be successful, your firm needs to be distinguished in some way. What makes it special? What drives the bus?

Most architects would agree that providing great design, great client service, and great technical documents are part of their value system, regardless of their size, market specialty, or location. Indeed, a few simple values, well executed, are all that’s really needed for success. However, there’s often a surprising disconnect between what firms say they care about and how they actually operate. This not only confuses clients, it confuses the staff. When it comes to values, we are what we do, regardless of what slogans may be found in the company brochure.

In a sense, values are like a lens: they are the medium through which we see the world, and also the medium through which the world sees us. Like any lens, values are a two-way street: they can either focus or distort the subject matter at hand. Like lenses, values can be shaped to suit a particular purpose, and they will also “refract” whatever passes through them. A firm’s “value proposition” is how it declares to the world at large not only what it stands for, but how the results can be measured. Bearing in mind that actions speak louder than words, your firm’s value proposition should clearly answer the following three questions:

When discussing design value, it’s important to use language that clients understand, and since most clients are financially minded, it helps to put things in economic terms. Here are a few examples of how the effects of good design can be measured:

Utilization rates: Space utilization is defined as net useable square footage divided by gross square footage. Obviously, the more useable square footage in a project, the better it is for the owner. (This is especially true for buildings that generate cash flow, such as retail or office space.) BOMA (Building Owners and Managers Association) publishes explicit guidelines on how to measure utilization, and these calculations are often the basis of lease negotiations, so they have bottom-line impact. By showing your clients how creative design can improve utilization rates, you can increase your value in their eyes.

Zoning envelopes: Skillful and clever designers can maximize the project scope within the allowable zoning envelope. The more you know about how to interpret the arcane legal language of zoning regulations, the more useful you will be. For example, mechanical spaces are often not counted against the allowable total, and sometimes mezzanines are exempt as well. The next time you have a project with a tight zoning envelope, try putting legal counsel to your team as a “design consultant” to get the most value out of the site. Your clients will thank you for it—it’s like putting money in their pockets.

Approvals processes: Intimate knowledge of what happens at City Hall can accelerate permitting by many months, saving time and money for all concerned. You can assist the client in filling out the forms, filing for the required hearings, and conferring with city hall staff to make sure that all relevant information is included on the applications and their concerns are addressed. By “lubricating” the approvals process, you will become indispensable to your clients.

Operational-maintenance costs: Over the useful life of a building, its capital cost pales in comparison to the operation and maintenance cost. By working closely with your engineering consultants, you’ll be able to make well considered recommendations about what kinds of materials and equipment to use—things that really save money over time. Don’t just guess, get the facts—even the choice of the light bulbs can make a substantial difference. Spend time with utility companies so that you really understand their rate structures and rebate programs. This will save your clients money every month, adding up to huge amounts over time.

Staffing costs: Salary and benefits for people who will work in the new building are far more expensive that energy costs. By showing a client how to lay out a department more efficiently—one that can accommodate more staff or one that requires fewer people to manage—creative design can save hundreds of thousands of dollars each year for the client. If you could run your office productively with 5 percent fewer staff, the benefits would fall directly to the bottom line. Clients are no different.

Speed: Getting a project done faster creates benefit in two distinct ways. First, a shorter project schedule reduces inflation and general conditions costs, saving immediate dollars. Secondly, by advancing the delivery date, the owner’s cash flow is also accelerated (in the case of an office building, retail complex, or rental housing this is a very big deal). Even if the building is not tied to a revenue stream (a municipal library, for example), early delivery means that patrons can start using the facility sooner and the owner can take advantage of higher efficiency MEP systems, thus reducing overall cost. To clients, speed really matters…they can measure its value in dollars and cents.

The Novartis 100 Tech Square project in Cambridge was a super fast-track project (250,000 sf constructed in 6 months). Because the client was relocating some functions from New Jersey to Cambridge and faced penalties for moving out late, each month saved was worth $1 million. Normally a job of this size would take 12 months to complete, so the "savings" (penalties not assessed) were in the range of $6 million. However, it's probably safer to say that the client saved millions in potential penalties.

These are just a few examples of “the metrics of value,” and none of them mitigates in any way the design aesthetic that the architect may propose for the project. On the contrary, by offering ideas that save money and create real value, you’re much more likely to gain the trust and endorsement of the client.

There’s no question that design is value-added enterprise; what’s surprising is that architects have such difficulty explaining why and how this is so. By articulating your “value propositions” in clear and compelling ways, you will do both yourself and your clients a favor. If you can put real money in the client’s pocket by reducing project development costs, accelerating cash flow, and lowering operational costs, your fees are likely to be higher and can be easily justified. (Who wouldn’t pay $1 to save $10?)

Most important, you’ll be using a language that clients can relate to. You’ll be able to make better informed and more timely decisions. The client will be able to afford the design touches that make the project truly exceptional. It all adds up to better architecture.

—Scott Simpson

Simpson is president and CEO of The Stubbins Associates in Cambridge, Mass. A senior fellow of the Design Futures Council, he is a contributing editor at DesignIntelligence. Simpson is also co-author of How Firms Succeed: A Field Guide to Design Management

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