First, the good news. Thanks to sizable increases in home and commercial construction, the greater U.S. economy appears to be showing signs of life. According to the U.S. Census Bureau, total construction spending in the first six months of 2012 amounted to $387.1 billion, 9 percent more than the same period in 2011. That trend has led the American Institute of Architects (AIA) to project a 4.4 percent increase in nonresidential construction this year—revised upwards from a forecast of 2.1 percent growth made back in January—and a 6.2 percent gain for 2013.
The bad news? Local and state governments continue to battle budget shortfalls, reduced tax revenues and a host of other priorities, dragging down growth prospects in the institutional market. The Census Bureau reports that overall spending on government projects in April 2012 fell to a seasonally adjusted rate of $271 billion, the lowest level since December 2006; federal construction alone was down 5 percent.
“Continued budget shortfalls at the state and local level, along with a depressed municipal bond market are holding the institutional market back from seeing similar upticks in spending,” says AIA Chief Economist Kermit Baker, Ph.D, Hon. AIA.
But what does design in an age of government austerity really look like? As you might expect, with stimulus funding running out and projects from 2007-2008 coming to a close, it has been a leaner few years for firms operating in the institutional sector. But while the firms we surveyed reported that the volume of work had dipped over the past few years, they also mentioned project scope as a frequent victim of the downturn.
“We have found that the requirements have remained the same, and that they can’t relax their standards just because times are tough,” says Pepper Morgan, a principal with IA Interior Architects. “If budgets are tight, what may happen is that the character of the project changes, and the focus will be on just the bare minimum—typically upgrades that are associated with maintenance and safety—rather than compromise on quality.”
“We are spending more effort evaluating needs, which determines facility size and ultimately the cost of the project,” adds Curt Parde, AIA, LEED AP BD+C, senior professional associate and vice president with HDR Architecture. “Nobody wants the perception they are getting more than the specified standard.”
According to Charles Todd, community studio principal with Little, the firm continues to work on five to six institutional projects at a time—a number that hasn’t changed much since 2007, although he acknowledges it “has migrated to smaller projects and more renovation work.” That echoes the experiences of other designers, including Morgan.
“We see a lot of agencies renewing their leases and staying in place much longer. So while in the past they may have moved after 10 years, they may now stay for 20 years. They are doing more renovations in place, rather than relocating.”
All of which means less work and fewer fees—a trend most firms anticipate continuing for at least the next two years. So what can you do to prosper in the institutional sector of the market in the meantime?
be a resource
Governments are navigating many of the same changes that have been affecting their commercial brethren; increasing real estate costs and a tech-empowered workforce are quietly pushing agencies toward flexible and remote work environments. And just like other clients, governments need help adjusting to these new workplace realities. Designers who are willing to spend extra time in the diligence and planning phases—and can remain patient as plans are revised or changed once again—will find themselves in demand.
“Several times over, we’ve seen the importance of due diligence at the outset of a project. Rather than immediately jumping into the design and construction process, we’ve worked with the client on workplace assessment and planning,” says Stephanie Douglass, LEED AP, senior workplace strategist with IA Interior Architects. “We define workstyles and look at how business is conducted. And we look for commonalities to accommodate a wide range of work patterns so that as situations and needs change, the workplace is flexible and will be accommodating.”
“Being more thoughtful about the planning and strategy up front can save a lot of time and money down the road.”
believe in speed
Decision makers may be taking longer before giving projects the go-ahead, but once they do, firms need to be prepared to move fast. Delivery times are dropping across the industry, but it has become particularly important for government players, who want to be seen by their constituents as purposeful and efficient.
“Once a project is rewarded, the timeframes for doing projects have continually gotten shorter. We are spending more time in planning, less in DD [design development] and CD [construction document] phases,” says Parde.
And while that means firms need to work on improving their own efficiency through improved processes and new technologies, Parde notes that individual employees also need to embrace the need for speed.
“Like the buildings we design, staff needs to be flexible. New construction delivery methods that require fast track design and multiple bid packages, new CAD platforms such as Revit, integrated design techniques—these all require a new mindset for architectural and engineering employees. An employee that is not adaptable and willing to change isn’t going to last long.”
find the crossover
As financial pressures at the state and local level continue to evolve, designers need to be prepared to consider and implement novel solutions. Many of the firms we spoke with reported that public-private partnerships are being discussed more frequently, and governments are looking to designers to merge the innovation found within the private sector with the budget constraints of their world.
Firms that can find ways to leverage and translate their experience in the private sector to public work will be positioned for the most success.
“There is an emphasis toward energy-related work,” says John Capelli, AIA, principal and director of government practice with EwingCole. “Therefore, we are leveraging our private sector portfolio and prior government sustainable design experience to pursue energy-related contracts.” He also recommends that firms “maintain a mix of public and private sector clients, and a staff that can flex between the two.”
Parde says that innovation in engineering design is important for his clients, but it also needs to mesh with a community’s sense of value—part of which you have the ability to influence.
“If constituents look at new government facilities and these facilities are the highest-end buildings in town, they begin to question who was in charge and how much money was spent,” he says. “However, there are areas in which government buildings can exhibit leadership and provide good examples to the community. These include durability, sustainability and efficient operations. Showing these clients how you are integrating the same efficient concepts that you use in the private sector helps them see they are getting good value.”