Managing the Professional Practice E-Book

• Herausgeber: John Wiley & Sons
• Kategorie: Geisteswissenschaft
• Sprache: Englisch

Seitenzahl: 622

Veröffentlichungsjahr: 2011

Beschreibung

The emphasis here is to explore the key issues influencing the culture, strategies and management operations of professional practices. The focus is upon established practices from growing ones to large international firms in the built environment. A key aim of the book is to promote aspects of management by function and activities, with discipline acting as context rather than the primary focus. The book is structured into sections around 3 main themes: managing the organisation; and managing specific issues that affect operations, and a third section reflects upon management from practitioner experience. Section I: 'Managing the organisation' looks at how the history of the firm creates both opportunities and rigidities for developing the practice, in terms of culture and market position, strategies and implementation, financial, marketing and HR management. Section II: 'Managing specific strategic and tactical issues' looks at how these affect approaches a discipline and operational processes in practices. These issues compliment those covered in Section I. Section III: 'Reflecting on practice' covers experience of those in practice and top practitioners detail how they are addressing key issues in their practice and for their discipline. Each chapter by a practitioner has a postscript from academic authors to make links back to research on theory and application. * Addresses the key issues facing practice managers * Collects latest research from leading academics * Offers comment on current practice from top practitioners

Leseprobe

Contents

Cover

Title Page

Copyright

Preface

About the authors

Introduction

Aims

Objectives

The Content

Section I: Overview in Scope and Context of Managing the Professional Practice

Chapter 1: Structures, management and markets

Introduction

Markets and Management

Structures and Management

Relationships and Management

Summary and Conclusion

References

Chapter 2: Strategic management of professional practice: The case of architecture

Introduction

What is a Professional Service Firm?

The PSF business model

Competitive Advantage in Architectural Practice

Sustainable Competitive Advantage in Global Architectural Practice

The Prospects for Managing Architectural Practice

Concluding Thoughts

References

Chapter 3: Cross-functional coordination: Conceptual model and its application in professional design practice

Introduction

Overview of the Key Theoretical Ideas

Translating the Findings of the Review to Apply in the Built Environment

Discussion and Conclusions

References

Chapter 4: Challenges of growth in a medium-sized engineering design consultancy

The Challenges Facing Firms During Growth

Case Company

Towards Implementing Growth Strategies

Epilogue to the Case Study

Conclusions and Areas for Further Research

Acknowledgement

References

Chapter 5: Sustainability into practice: How the sustainable development agenda has impacted on the surveying profession

Introduction

The Surveying Profession

RICS Sustainability Policy Principles

Current Issues in Surveying Practice

Possible Future Developments

A Case from Practice

Conclusions and Recommendations

References

Section II: Managing Specific Issues in the Professional Practice

Chapter 6: Equipping project teams for competitions: Architecture practices in the Italian market

Introduction

Theoretical Framework

Methods and Results

The Results

Conclusions: Implications for the Architectural Practices and Directions for Future Research

Acknowledgement

References

Chapter 7: Client management and identification

An Overview of Client Management

Background in Theory and for Practice

Client Identification

Client Identification in Design-Led Firms

Scoping and Understanding customer Identification

Creative Management

Conclusions and Recommendations

References

Chapter 8: How thin to win: FM service provision issues

Introduction

Client-contractor Relationships

Minimising Costs While Maximising Value

Managing Scope Creep while Maintaining a Customer service Orientation

Conclusion

References

Chapter 9: Innovation in professional service providers: UK quantity surveying practices

Introduction

So What is Innovation?

Why do firms in Construction Innovate?

How does Innovation Occur?

Barriers to Innovation

How have QS practices innovated?

How are QSs Innovating in Changing Conditions?

Summary and Conclusions

Acknowledgements

References

Section III: Reflections upon Practice

Chapter 10: The make experience

In the Beginning – Making a Start

Trust – Making firm Foundations

Designing Things – Making Good

What's Next – Making the Future?

Postscript Comment to The make experience by Ken Shuttleworth

References to Postscript Comment

Chapter 11: Squaring the circle: Delivering international services locally

The Practice

Management Structure

Present Challenges

Postscript Comment to Squaring the circle: Delivering international services locally by Larry Malcic

References to Postscript Comment

Chapter 12: Innovation in the construction sector

Context

Value from Innovation

Promoters of Innovation

Managing the Innovation Process

Example Innovations from Professional Practice

Conclusion

References

Postscript Comment to Innovation in the construction sector by Jeremy Watson

References to Postscript Comment

Chapter 13: Managing a project management division

Introduction

The Cyril Sweett Business Model

What do We Measure?

Tools Available

Management Information Systems

Thoughts of a User – Does it Work?

Conclusion

Postscript Comment to Managing a project management division by Andrew McSmythurs

Is There Anything Not Dealt With?

References to Postscript Comment

Chapter 14: Developing capacity in an emergent market

Introduction

Background

Initial Issues

The Opportunity

Possible Solutions

Resultant Issues

Conclusions

Postscript Comment to Developing capacity in an emergent market by Robert McIntosh

References to Postscript Comment

Chapter 15: Branding professional services: Making the intangible tangible

Introduction

Understanding the Barriers

Why Should you Brand…?

The Process of Branding

Building Capacity

Acknowledgement

References

Postscript Comment to Branding professional services by Kate McGhee

References to Postscript Comment

Chapter 16: The first 20 years

The Beginning

Towards Becoming a Main Player

Moving with the Market

Securing the Future

Management Issues

Conclusion

Postscript Comment to The first 20 years by Mike Nightingale

References to Postscript Comment

Chapter 17: Reflection on the redevelopment of the University of Tokyo Hospital: The last 26 years

Relationship Between the Clients and Architects

Office Management

Conclusion

Postscript Comment to Reflection on the redevelopment of the University of Tokyo Hospital by Shinichi Okada and Makoto Nanbuya

References to Postscript Comment

Chapter 18: Beyond the first generation

Introduction

Roles and Responsibilities

Reward

Transfer of Ownership

Promoting the New Practice

Conclusions

Postscript Comment to Beyond the first generation by David Stanford

References to Postscript Comment

Chapter 19: Changes in UK construction professional services firms in the late 20th century

The Origins and Development of Davis Langdon

Deregulation of the Professions

Growth and Consolidation

Diversification

Commentary

References

Postscript Comment to Changes in UK construction professional services firms in the late 20th century by Jim Meikle

References to Postscript Comment

Conclusion

Acronyms

Index

This edition first published 2011. © 2011 by Blackwell Publishing Ltd.

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Library of Congress Cataloging-in-Publication Data

Managing the professional practice: in the built environment / edited by Hedley Smyth.

p. cm.

Includes bibliographical references and index.

ISBN 978-1-4051-9975-9 (pbk. : alk. paper) 1. Construction industry-Management. I. Smyth, Hedley.

HD9715.A2M298 2011

624.068-dc22

2010031869

A catalogue record for this book is available from the British Library.

Preface

There is beginning to be a considerable body of resources on how to manage the professional practice that goes beyond the homogenous texts on practice management that rather imply that they are all the same and that there is one route to success. Two early contributions, which broke the mould, are undoubtedly Donald Schön's 1983 book, The Reflective Practitioner, and David Maister's work, especially his 1993 book, Managing the Professional Service Firm. Yet there are many important issues that remain to be explored in the first place or in greater depth, and this book aims to make a contribution to that development. Diversity in firm structure, strategy and tactical practice are evident in the market, which I have aimed to reflect in the contributions presented here.

My motivation is a long-standing interest in the management of firms in the built environment by direct experience and through academic research, including a period of over ten years working in professional practices, especially architects and design consultants. The more immediate motivation is teaching on masters courses a module called, Managing the Professional Practice, and it is for those students that this book is particularly dedicated as they represent the next generation of practice founders and senior management in their countries and around the increasingly globalised professional consultants in the built environment.

At the time of writing, the professions in the built environment have been experiencing one of the worst global downturns, yet are on the cusp of the upturn. Management will be looking to develop further depth to their services or grow their practices or even both by the one leading to the other. The shape in which practices entered the downturn, especially in resources terms, heavily influences the scope for development into the upturn. The vision that management have for the future will prove critical in relation to the value demanded and desired by clients and other stakeholders. How these combine to locate the market position of each practice will be important for each organisation and will aggregate with other practices to shape the professional practice by size, location, market segments and discipline.

H.S.

London, UK

About the authors

Summary details are provided about each author, arranged in alphabetical order.

Professor Antti Ainamo is part of the Department of Social Research, University of Turku in Finland.

James Barrett works as a change consultant and was the Knowledge Transfer Associate, UCL, working with engineers Silcock Dawson.

Professor Tim Dixon is Director of the Oxford Institute for Sustainable Development and Professor of Real Estate at the Department of Real Estate and Construction Management, School of the Built Environment, Oxford Brookes University.

Andrew Edkins is Senior Lecturer in the Bartlett School of Construction and Project Management, the Faculty of the Built Environment, UCL, London.

Junko Iwaya, of Yoshinobu Ashihara Architects & Associates in Tokyo, is a former architect at Nightingale Associates in London.

Miles Keeping is Director and Head of Sustainability at real estate consultants GVA Grimley.

Sofia Kioussi undertook research and her Masters in Project and Enterprise Management with UCL, joined ISV, with particular responsibilities for marketing, and is currently a practising architect and project manager in Athens.

Larry Malcic is Design Director for international architects HOK in their London practice.

Beatrice Manzoni is in the Department of Management, University Bocconi in Italy, and is undertaking a PhD in the Bartlett School of Construction and Project Management, the Faculty of the Built Environment, UCL, London.

Kate McGhee is an independent strategy & research consultant and, at the time of writing, was a client director at the brand consultants, BPRI, which is part of WPP plc.

Robert McIntosh is Executive Director for CB Richard Ellis Hotels Asia Pacific.

Andrew McSmythurs is Director of Project Management at cost consultants, Cyril Sweet.

Jim Meikle was formerly a partner of Davis Langdon LLP, establishing their management consultancy division. He is currently a non-executive director of AMA and a member of a number of UK industry bodies. He is a visiting professor in the Bartlett School of Construction and Project Management, UCL.

Makoto Nanbuya works with Okada & Associates, architects, engineers and planners in Tokyo.

Mike Nightingale is founder of healthcare and education architects, Nightingale Associates.

Shinichi Okada works with Okada & Associates, architects, engineers and planners in Tokyo.

Dr Stephen Pryke is Senior Lecturer and Course Director for the MSc in Project and Enterprise Management in the School of Construction and Project Management, the Bartlett Faculty of the Built Environment, UCL, London.

Kathy Roper is Associate Professor and Chair of Integrated Facility Management, Georgia Institute of Technology, School of Building Construction, Atlanta.

David Shiers is Senior Lecturer and Researcher, Department of Real Estate and Construction in School of the Built Environment, Oxford Brookes University.

Dr Ken Shuttleworth founded Make Limited in 2004, having built up a considerable portfolio of experience as a partner at Foster and Partners, and is a visiting professor at De Montfort University and Nottingham School of Architecture, and a member of several public and private design review panels.

Dr Hedley Smyth is Senior Lecturer in the Bartlett School of Construction and Project Management, the Faculty of the Built Environment, UCL, London.

David Stanford was one of the founding directors of Geoffrey Reid Associates and is currently a group director of 3DReid, responsible for integration and continuous improvement across the practice.

Professor Jeremy Watson, Global Research Director at Arup, a global firm of engineers, designers and planners, is responsible for Arup's Research Strategy. He is Chief Scientific Advisor to the Department of Communities & Local Government.

Professor Graham Winch is Professor of Project Management and Director of the Centre for Research on the Management of Projects at the Manchester Business School, University of Manchester.

Introduction

Aims

There are few books exploring this topic of managing the professional practice. Those that exist have tended to set out some general guiding principles for the professions or for a particular discipline. Thorny issues and major challenges cannot always be adequately addressed in this way. Many of the major management decisions arise from the specific internal characteristics of practices and from the contextual circumstances that practices are operating within at the time. This book addresses many of these topics, such as the step-changes associated with growth, developing capacity as a large international practice, the succession problem as founders retire and securing the future for the next generation. It also addresses issues that are sometimes misperceived, frequently poorly understood and inadequately managed, such as marketing, the development of technical knowledge and innovation, and core competencies.

Most senior practice managers are from their operational discipline. They have not been extensively educated or trained in management. This is both a strength and a weakness. Large practices employ experts in support, yet it is the architect, engineer, surveyor, project manager and so on who form the core of most decision-making in managing the professional practice. It is hoped that this book makes a contribution to inform better management for the current generation of reflective practitioners and for the future generation of founders and senior managers who are about to embark on their careers.

The management of the professions or the management of particular disciplines have tended to treat firms as homogeneous. Individual firms are different, the differences frequently giving rise to the degree of comparative success and to fitting into the markets in which they operate. Firms are also different within their boundaries. The market profile may not always echo the internal operations, and the organisational culture may have several hues across teams, functions or offices, and so on. Therefore one aim of this book is to embrace the diversity of management across the professions and in the disciplines within the built environment. There are different ways in which professional practices can successfully manage themselves, management approaches being part of the palette for differentiating the practice. Differentiation embraces two possibilities:

1. Management to help manage the market so as to avoid or minimise the extent of competition.

2. Management to help effectiveness and efficiency so as to be more competitive than the competition.

A second aim of this book is to consider the management of particular aspects of professional practices by function rather than discipline. In other words, rather than dealing with the ideas of being good engineers within a discipline or of improving design management, the functional focus of the book is managing tangible and intangible resources, managing marketing, managing social capital; hence, also managing such issues as innovation, collaboration or branding.

A third aim of this book is embodied in the title. ‘Managing’ is dynamic and thus is in flux and under constant review. Both internal and external issues impact upon the way in which firms evolve consciously and unconsciously. An aim of management is to be more aware of this dynamic and its impact. Whilst intuitive responses frequently work well, the danger is being ill-informed or reactive using poor judgement. Informed decisions that combine intuitive experience with conscious appraisal are more likely to succeed in the long run. Managing the professional practice involves assessing whether intuitive responses are appropriate, whether previous solutions still apply and what new measures are needed that are robust under emergent conditions.

The diversity of management practice and options cited above implies that there are distinctive practices. Founders of new practices tend to wish to mould the practice in their image, as this is what feels comfortable. Established practices tend to copy the success of others, being far less adventurous and more risk-averse. It is getting a balance between applying what is tested and introducing the new that is important. Moulding a practice in your own image does not necessarily mean that it will be successful in the market. Copying what others do may lead to losing ground against those competitors who anticipate new trends and forge their market position more rigorously. In other words, celebrating the diversity of management in the professional practice is not a relativist argument that ‘anything goes’. There are distinctive management approaches that prove significant. There are patterns of general management activity that endure for particular disciplines, markets and professional conditions. These can be copied and adapted to both serve practice efficiency and serve the distinct elements that make practices effective. In other words, the general and the particular need moulding, arising from internal and external factors. It is the moulding that gives rise to the distinctive profile of each firm and its success in the market. It is hoped that this book will provide a set of academic and practitioner chapters that are a rich source of experience from professional practice. The book cannot provide a substitute for experience in the field, but it can enrich our understanding so that decisions in the future are informed by, and improved as a result of, the experience of others.

Management operates at a number of levels. Culture, strategic planning and decision-making, formal systems and procedures, tactical actions, and finally informal routines and norms, which both emanate from and inform the culture provide the levels and their interaction are all part of the management domain. The discipline provides the reason to be. Institutes and professional certifications provide guidance on the discipline. Marketing provides the strategy to secure the work, finance the oil in the wheels and enables the people to do the work. Legal and other issues are added in, but the discipline of operation, marketing, financial control and human resources are essential elements without which survival is impossible. Even practices that do not seem to overtly take one or all of these seriously – for example marketing – have implicit strategies and tactical implementation. The danger is that the lack of awareness of what they do may leave them vulnerable to competition, eroding profitability. Explicit awareness and understanding are important. Those in business primarily for profit, rather than love of the discipline per se, tend to be more aware of management issues. Yet to be primarily motivated by profit means that the firm must be good at their discipline to survive and seek to reinforce success through management functions. Those in business primarily for the love of their discipline must be good at management in order to be able to keep on being an architect, cost consultant, engineer and so on. Management is unavoidable. Management should be an important strength for any practice, yet it can act as a constraint. The aim is therefore to ensure that it is a strength that improves operations whether the main motivator is the love for the work or the desire to be highly profitable.

This book therefore aims to provide some means and guidance to strengthen managing the professional practice in the realm of the built environment.

Objectives

This book will explore some of the key issues of managing the professional practice for the built environment. Given the remit already set out, it is impossible to cover every aspect of management or every approach to management. The objectives are to provide sufficient information and analysis to inspire and guide professionals setting up or running their practices. There are a number of issues that are addressed in this book, for example the structure of the professions in the built environment, with practices typically being smaller than their counterparts in other sectors.

Two objectives are particularly important: managing practices in their totality and managing particular processes within practices, and these are covered in Sections I and II respectively; different practitioner chapters in Section III cover both objectives. Section III meets a further objective, that is, to combine theoretical exploration and conceptual exposition with practice as experienced on the ground. Thus, the book covers theoretical analysis and empirical research and is combined with experiential reflection. Thus, academics and leading practitioners in their fields have written chapters. The chapters from industry are supplemented by postscript comments from academics to provide some analytical support and locate the experience in the broader industry and management literature. In this way, it is hoped that the book provides a depth of analysis and insight.

The focus is upon established practices, particularly growing practices and large ones operating in both national and international markets. These are the ones where management is most critical, because more sophisticated forms and approaches are needed. Growing practices move from implicit to explicit forms of management, as founders no longer have the span of control to manage by example or direct guidance. These issues are particularly important for certain groups. The book is primarily targeted to the next generation of practice founders and management, to today's reflective practitioner and to the research community. It will therefore appeal to researchers, postgraduate students, some final year students as they graduate and pursue professional qualification and to the ambitious professional who wishes to have an informed and rounded view of their sphere of work.

The Content

The book is divided into two halves. The academic contributions make up the first half, which is subdivided into Sections I and II, covering management of the practice totality and managing particular processes within practices in sequence. The practitioner contributions make up the second half, Section III.

Sections I and II are those with an emphasis upon managing the organisation as a whole. The section gives an overview by providing insight into the scope and context of managing the professional practice.

Chapter 1 addresses markets, organisational structures and relationship issues across the sector that managers address. It explores the way in which market structures are clustered and how practices are differentiated in their structure. The economic forces in the market also shape the ways in which successful practices manage resources over the economic cycle. These combinations of structures in the market and processes over the economic cycle give rise to certain management requirements. According to these internal and external structural factors, and in an interactive way between structure and operations, the degrees of creativity and routinised work are further dimensions that shape management and practice by discipline. A great deal is made of social capital – ‘people are our main asset’ – in the sector, yet this is infrequently reflected in strategic investment in people and particularly the value arising from relationships and how these are managed. The focus upon discipline can lead to overlooking how people create and add service value, which provides the final theme of this chapter.

In Chapter 2, Graham Winch addresses the economic leverage amongst architectural practices to survive and to compete as firms in markets of project ecology and globalisation of services. This concerns inputs, for example in the form of staff and suppliers of subcontracted work, and also deals with serving different types of international clients. These trends are explored according to a management model that characterises architectural practices along two axes: project complexity and quality preference. The analysis is illustrated with a series of vignettes from international and local practices, mainly from the USA and across Europe. The analysis brings into focus a series of important issues, including the outsourcing of design and production information given emergent ICT, BIM and parametric design capabilities, the role of the management in relation to professional values especially for the large global practices and ownership forms, and the tactics used to tackle recession through economic leverage by size of firm and staff leverage.

Antti Ainamo theoretically considers cross-functional working in design teams. In Chapter 3, he draws upon the work of others where design is considered the ‘product’. He brings a perspective from research on design in information and telecommunications, retail and fashion design, conceptually exploring these lessons in the context of engineering and consulting services. The chapter especially explores creativity in participative structures and the role of marketing and design-led approaches to facilitating the process. Whilst architecture and engineering practices in the built environment follow design-led structures in the main, the marketing dimension is more challenging and this links with the findings presented in Chapter 7.

Growing from a small-to-medium-sized engineering consultancy to a large-scale player provides the focus for Chapter 4. Andrew Edkins, James Barrett and Hedley Smyth explore the human resource aspects in making a step-change. Organisational stretch is necessary, yet it can lead to a reduction of quality; and expansion too brings with it issues of maintaining the culture and coherence of quality delivery that have provided the basis for past success and for sustaining future growth. Selecting and inducting new staff are key issues, but retention and development of existing staff are also vitally important in periods of expansion, requiring careful management. Silcock Dawson, a multi-office firm of UK building services consulting engineers, provides a case-study example.

In Chapter 5, David Shiers, Tim Dixon and Miles Keeping consider some of the far-reaching practice management implications of sustainability issues. Sustainability can be construed as an operational issue but it fits best in Section II. The chapter teases out matters that have more fundamental implications, that is beyond the issues the significance of which are therefore more strategic than much management has yet to embrace, in other words how practices are managed as well as the environmentally related service per se. They review sustainability practices and legislation, placing them in the institutional context of the Royal Institution of Chartered Surveyors (RICS), corporate social responsibility (CSR) and whole-life-cost service issues, and look at implementation through a case study.

Section II covers issues at a more detailed level. Chapters 6 to 9 address particular issues that are more concerned with managing operational processes from strategic and tactical perspectives.

Chapter 6 is by Beatrice Manzoni, who addresses the performance of architects in project teams. She selects architecture practices undertaking competitions as her focus and the Italian market in particular for conducting her research. She explores a series of factors, including age, nationality and reputation of the architects or practices involved, which might be expected to be critical to performance according to the literature. She examines these in the field, finding that the age of the practice is not a good predictor for success in competition entry. Local firms are still the most successful, despite trends towards internationalisation and ‘strong idea’ firms or ‘archistars’ from one location competing or entering alliances to compete in other locations. Therefore the ‘strong ambition practice’ is not a function of age or practice longevity (cf. Chapter 2 by Graham Winch), thus further work is needed to open this ‘black box’ of keys to success in competitions.

Chapter 7 handles the intangible issue of client identification and endeavours to articulate the processes that lead to clients identifying with the designs and architecture practices. Hedley Smyth and Sofia Kioussi examine how client identification relates to brand and relationship marketing and management. Reputation and brand emanate from the designs produced by the practice. Clients that identify with the reputation and the brand are drawn to practices and individual architects. Commissioned designs will reinforce this process, but further identification is induced through the relationships built up between the architects and their clients. Relationship marketing tends to be implicit and poorly understood by architects, especially in ‘strong idea’ practices. Managing market reputation and hence the brand is therefore not merely a matter of developing robust relationship marketing processes, but relationship management is also a means for improving design.

Chapter 8 is by Kathy Roper, who considers the facilities manager practitioner. Facilities management sometimes lies in the grey area between being a pure consultant in the sense of acting as an advisor or contractor management consultant and being a direct provider of operational services. Does it neatly fit into the category of professional? Certainly, there has been a drive to professionalise the service and secure institutional recognition in a growing number of countries. However, the ‘grey areas’ are also deliberately configured through alliances in order to serve particular market needs as Kathy Roper sets out in her exposition of being lean and creative in competitive markets in terms of cost and quality. She explores three avenues in particular: client–contractor relationships; cost minimisation and value maximisation; and managing scope creep with a customer-service orientation.

In Chapter 9, Stephen Pryke revisits innovation in quantity surveying. He provides a review of conceptual approaches to innovation and then reviews practice in two stages. First he summarises previous work conducted on innovation in the QS practice. He then considers developments of recent years, particularly those that have led to service diversification and the increasing disjuncture between innovation in practice and the role of the professional institution. A primary conclusion is that innovation is becoming a key source of survival in the current recession, and that this contrasts with common wisdom that it is a costly source of competitive advantage.

Section III reflects upon practice. The remaining chapters are by practitioners, each with a ‘postscript comment’ from an academic, to place the practical reflection in a wider theoretical context, including the relevant literature to facilitate a deeper understanding of the conceptual issues being faced in practice.

Ken Shuttleworth, founder of Make architects, addresses creativity in the design studio and, in particular, how this is managed and enhanced through an architecture practice, which has been set up as a trust, where all the employees are owners of the practice. This is the focus of Chapter 10. With considerable high-profile international experience in architecture over a long period of time, it is a challenge to adopt a completely different management model. The chapter commences by setting down the aims and values envisaged from the start of the company and goes on to show these have effected ways of working both at a practice level – for example how reduced workloads can be managed under such a structure – and at studio level in terms of design. Working in and for the broader community is also addressed in the chapter, linking the practice aims and design operations. A postscript comment is provided by Graham Winch, who points out some of the issues that the practice will face as it grows and tries to retain leverage in the marketplace.

Larry Malcic in Chapter 11 outlines the issues faced in design for an international practice. A small executive group, based in San Francisco, provides the overall strategic values and objectives, in which the regional offices operate. The London office of HOK covers the European, African and Middle East regions. Each local office is encouraged to operate as an entity, yet processes are in place to encourage sharing of expertise and staff across the region. Larry Malcic describes a fairly fluid process of creativity, where the practice aims to put negotiated outcomes ahead of efficiency. This is a matrix organisation, although perhaps looser than the traditional understanding of ‘matrix’ as a system whereby the horizontal and bottom-up negotiation is core to the creative process. Beatrice Manzoni provides a postscript comment that considers the challenges to a global design practice in producing good design for its markets. The first challenge is about design to embed a building in its local context. The second challenge is related to ways of coordinating work to maintain creativity.

Arup has been significant in design and technology innovation and development over a long period. Jeremy Watson considers innovation in construction and professional practices in particular in Chapter 12. Through reviewing the sector and influences from other sectors he sets out the ways that professional practices innovate, and ways in which they can increase their role as innovators technically, of products and services, thus adding to the trend of diversified services provided by consultants, especially at the upper levels of the market – see also Chapter 9 by Stephen Pryke. Jeremy Watson also provides examples of innovations that have started with particular initiatives and projects, yet have proved to have broader application both as creators of value for clients and as sources of income streams for the professional firm. Antti Ainamo provides a postscript comment, exploring how creative engineering capabilities are important for architects to realise their creative aesthetic ambitions and the management challenges of maximising capabilities and transferring them into broader application.

The balanced scorecard has become a popular means to manage activities, ranging from projects to companies. In Chapter 13 Andrew McSmythurs demonstrates how a firm of cost management consultants employs the balanced scorecard approach across the business of cost consultants Cyril Sweett, and in particular how the approach operates within the project management division for which he has responsibility. He takes both a top-down and bottom-up approach in the sense that, on the one hand, the approach provides general guidance and a model within which performance is monitored and strategic decisions taken, and on the other hand the activities of the division contribute to guidance on operational performance and resources to be managed, especially cashflow for the business as a whole. These top-down and bottom-up management process are mirrored at the project management divisional level for projects and clients. Stephen Pryke considers the strategic and leadership implications from a socio-psychological perspective in his postscript comment.

Robert McIntosh of CB Richard Ellis examines capacity development in an emergent market in Chapter 14. Charged with responsibility for developing specialist hotel consultant services for the Asia Pacific region he examines the options for so doing, the location from which to coordinate the service and constituting the service that extends beyond development and investment valuation and appraisal to in-depth understanding of the hotel and related business environment and the range of business models applicable. Capacity is being developed using existing staff in the region and drawing upon global expertise within the firm from other offices. Capacity development therefore involves core competencies arising out of multidisciplinary team working that cut across traditional service silos. David Shiers and Hedley Smyth provide the postscript comment, which analyses the underlying issues of building capacity, especially issues of culture, competency development and decision-making routines.

Kate McGhee writes about the importance of branding from the perspective of BPRI, a brand research organisation that is part of the WPP advertising and media group. Chapter 15 therefore looks into the realm of built environment professions as a dispassionate observer, drawing attention to the lack of focus on branding in this sector in management terms and the benefits of taking brand management as part of a practice business model. Brand originates with the reputation of the service, yet is also part of who the practice are. Going on to manage branding is part of who the management are and Kate McGhee shows that it is a matter of mindset that is a primary barrier to explicit management. It is this lack of awareness of practitioners that is picked up by Hedley Smyth in the postscript comment and is placed in the wider domain of marketing and market management.

Mike Nightingale, founder of the healthcare, education and science architects Nightingale Associates, provides, in Chapter 16, a personal account of the vision and entrepreneurial mission to develop a practice from scratch to a leader in its field. The account shows the value of practice role models and previous personal experience for the new practice. It also shows the importance of contextual issues that, whilst specific to time and circumstance, are faced by all new practices in their own way. The overall management lesson is the way in which entrepreneurial vision is combined with, and harnesses, experience in the circumstances to shape a successful practice. The consistency of application has led in the case of Nightingale Associates to establishing a leading UK practice that is rapidly internationalising with the support of its parent at the time of writing, Tribal plc. Postscript comment is provided by Andrew Edkins, who poses alternative growth strategies of being corporate in approach or cloning offices and ‘franchised’ entrepreneurial units. Adhering to the core values, the practice chose a more corporate approach, first through organic growth, second through acquisition and third by aligning with a larger enterprise.

Chapter 17 comes from Shinichi Okada and Makoto Nanbuya (translated by Junko Iwaya). They describe the approach of Okada & Associates to the master planning and design of a large hospital project in Tokyo. In Japan, long-term business-to-business relationships are commonplace, yet this project has longevity in national terms. The management of the office for this project (and other projects) is set out in the chapter, covering design, resource and marketing dimensions of management. In his postscript comment Andrew Edkins covers three areas: how the work for the client constitutes the management of a programme, the significant role of relationships in delivering complex projects within the programme; and the challenge of managing knowledge, particularly imparting tacit knowledge within the practice.

In Chapter 18, David Stanford, a director of 3DReid architects, explores the thorny issue of succession when the founder and major shareholder retires from a practice. This is frequently an ill-considered issue but is best tackled in principle from set-up. He suggests that there are three options. Ownership remaining with the founders even though they have retired is one option. A second is the transfer of ownership to the practice, for example through a management buy-out, setting up an employee trust or share ownership scheme. The third option is to transfer ownership outside the practice. This was the option pursued by Reid Architecture in the acquisition and merger with 3D to form 3DReid. The chapter continues by developing some of the issues addressed in integrating the two practices, for example cultural fit, systems and procedures, and communications. A postscript comment is provided by Hedley Smyth, who places this case in a wider context to explore how such changes affect the market position and culture of the organisation in ways that will change the practice but may threaten its ability to compete.

In Chapter 19, Jim Meikle takes a look at how one professional service firm, Davis Langdon, developed at the end of the last century and into the new one. Davis Langdon grew to be the largest quantity surveying and cost consultant practice, diversifying the range of their services as they grew. Mergers and acquisitions were a major component of that growth and a part of the continuing consolidation and growth of firm size at the top end of the professional market. The postscript comment is provided by Hedley Smyth, who considers the importance of large multidisciplinary practices with global reach having a base in the leading world cluster for the professional practices in London.

The Conclusion tackles a selection of key issues distilled from the book and presents them as overarching issues that managers of the professional practice and the research community respectively could probably find themselves addressing over the coming years. These could even be issues that they should address as the book provides a weight of evidence that can be used to suggest this.

Section I

Overview in Scope and Context of Managing the Professional Practice

Chapter 1

Structures, management and markets

Hedley Smyth

Introduction

The professions have a long history, including clerics, medics and lawyers, with varied modern origins, for example in the western part of the globe in the nineteenth century. Modern professional practice is typically defined by exclusive expertise captured in a body of knowledge (BoK). Such bodies are usually regulated institutionally and prescribe values, including:

trustworthiness;formal association, certification and registration with the relevant professional body;serving the public interest.

The knowledge and codes of professional conduct provide a basis for operation that in many other areas of industry and practice would need to be established through management within the organisation (cf. Mintzberg, 1979).

The built environment professions, the focus of this book, are similar in these respects. Architects, engineers including various specialisations, surveyors in various forms and land use planners are established disciplines recognised by the institutional arrangements described, although the planning profession largely has its origins in the public sector activity rather than commercial activity, although recent times have seen a growth in private professional practice in this discipline. Project management and facilities management are emergent professions. For project management, there are several BoKs – for example the project execution emphasis of the Project Management Institute's PMBoK®, the more strategic BoKs of the Association of Project Management and the International Project Management Association and the Japanese ENAA demonstrate a diversity of approaches and BoKs that are ‘thin’ compared to those of medicine or architecture. Therefore, practice is dynamic and diverse according to the maturity of the profession, and is also affected by the regulatory and market conditions by nation and professional institution.

In recent decades there has been a crisis in the professions, which has been evident within the built-environment professions too. Society has generally become more educated and confident to challenge professional ‘expertise’ (e.g. O'Neill, 2002a), which is reinforced by a multitasking mentality and a greater ‘DIY culture’ in some nations. In the built environment, there have been different challenges in different places. In China, for example, large municipal design institutes have been subjected to increasing commercial rigour and have also been evolving new forms of provision. In the UK, as another example, in the late 1980s and throughout the 1990s several changes were of note. The built environment professional fee scales became subject to competitive bidding, perceived poor project management from architects and poor marketing and financial control of professional practice were becoming critical whereby change became inevitable. Architects have narrowed their focus in the UK – as in many countries – on the creative aspects. There has recently been migration ‘up the food chain’ to put increased emphasis upon master and urban planning amongst some practices. Concurrently traditional quantity surveying practices transitioned to cost consultant and project management activities. Financial management, especially cashflow management, has improved, although marketing remains poorly understood, especially by architects. Human resource management is underdeveloped. Despite the common cry that ‘people are our greatest asset’, practice does not always match the rhetoric. Investment in people is low, which although understandable given labour market mobility and the multiplicity of firms, is also a real challenge, given how much effort practices make to keep clients compared to keeping good staff. More surprising is the lack of investment in social capital, specifically the knowledge and skills that are spread and embedded across the practice, frequently called core competencies that add value (e.g. Hamel and Prahalad, 1996) and dynamic capabilities that improve effectiveness and efficiency (Teece et al., 1997). This is surprising considering that professional practice is essentially a knowledge-based industry, much of the knowledge being embedded as tacit knowledge and skills derived from experience that comprise competency and core competencies.

These trends have led to less reliance upon professional expertise in the sense of being willing to pay for a basic service, especially where intangibility weakens bargaining positions: the effort and value of the inputs; the awareness of the contribution that the finished facility (outputs) will make to organisational (including household) well being and performance; and the value to wider society as onlooker and end-user. Bargaining positions are not strengthened for practices delivering high value, because added value from intangibles such as tacit knowledge and core competencies are difficult to assess at any time, especially before delivery. This is not helped by clients, even sophisticated ones, who switch from seeking firms with a differentiated focus in boom times, to having a price focus for selection under slump conditions.

New procurement forms have added to the mix over the decades, changing the power relationship between client and professional. Design and build, construction management contracts, various design-build-finance-operate forms of contract, including PFI and PPP contracts, tend to increase contractor power at the expense of the professions.

Yet buildings and built environment facilities are becoming more complex, and client demands more sophisticated. Value, especially added value, is in demand, particularly amongst clients where certain facilities form a vital element for their competitive advantage or public profile. Part of sophistication has been the focus upon accountability, especially performance measures. This is a double-edged sword – essential, yet if dominant over the trustworthiness ascribed to professionals adds to the challenge in that it conveys the message, ‘we don't trust you’, or as Anora O'Neill stated, ‘In the end, the new culture of accountability provides incentives for arbitrary and unprofessional choices’ (2002b).

Professionals end up concentrating resources and effort into satisfying key performance indicators (KPIs) rather than delivering what is really required – value and added value. This, coupled with the form filling to be placed on corporate and public sector panels of suppliers, plus satisfying procedures for prequalifying for competitive bids has a net corrosive effect. Whilst it makes reasonable sense for individual organisations to make such demands, the sum adds significantly to costs while margins are forced down by competition. The consequence is higher long-term prices, or compromises in quality – the very thing that clients are trying to reassure themselves about or insure themselves against. One solution is growth of the professional practice into larger companies to obtain economies of scale and scope in managing the growing set of bureaucratic demands, increasing the competence base in breadth and depth to meet complexity requirements and taking advantage of cost differences in different national markets – another notable trend of the past decade or so.

Geographical diversification of large practices has been a major trend, coupled with mergers and acquisitions. The peak of the recent boom saw a considerable number of mergers and takeovers as cash reserves were employed and pooled to increase market penetration and geographical spread. Large multidisciplinary practices have emerged in this trend. A further wave of takeovers has occurred near the bottom of the recession, 2009–10, as well-placed firms, which managed cash flow and built up reserves in the boom are buying up struggling practices, even large ones, as they reposition themselves with higher market share for the return of growth market over the coming years.

This corporatisation of professional practices carries its own problems. Increased market power and reduced national allegiance has the effect of reducing reliance on professional institutional requirements and norms. It also tends to render the firms more self-interested rather than their pursuing independent judgment on behalf of clients (cf. Chapter 2 by Graham Winch). Furthermore, it can distance them from the ethical issue of serving public interest. This is exacerbated by some professional bodies becoming more introverted and thus failing to adequately serve their members' interests, which is not an easy task where the disciplines are redefining their roles, as cited earlier for quantity surveyors in the UK (cf. Ormrod Committee, 1971).

There are a number of general trends – institutional context and the value of professional expertise, deregulation and intensity of competitive forces, new forms of procurement and market power, accountability and trustworthiness, self-interest versus broader stakeholder and societal interests, the importance of social capital and concentration at the top into large practices undertaking increasingly complex projects – that have led to considerable change in the professions, which have been, and are being, expressed in different ways in different regions and nations. These affect the way professional practices are structured and managed and hence operate in the market. The market too affects the management and structuring of professional practice. These trends will continue and be reconfigured as part of change. In other words, an ideal state does not exist, but that is not to say that people should not pursue ideals in their discipline and in managing professional practice. The important point is to be aware of the trends and prevailing conditions, and to pursue goals that will work in the current and emerging context, and that are informed by ideals and aspirations. The chapter will consider each of the main dimensions – markets, structures and relationships, and their implications for management – starting with markets.

Markets and Management

Services in general account for 70% of employment and value added in OECD countries (OECD, 2005, cited in Jewel et al., 2010). Growth is concentrated in the G7 countries (Brook, 2008; Jewel et al., 2010). Markets are further clustered into centres of activities.

World Clusters

Many sectors of economic activity are concentrated in centres of global excellence, often referred to as world clusters. The most well-known world cluster is probably Silicon Valley in California where expertise in IT development resides. World clusters typically embody forces of competition and cooperation in the market. Being in a climate of creativity, access to expertise in general and the benefits from drawing upon a labour market with specific expertise in domains of specialisation are key factors feeding off each other in self-reinforcing ways.

Where are the world clusters for the built environment professions? Los Angeles, New York, London and Tokyo are consistently recognised as such. Chicago was a key location but has lost a premier position, whilst Shanghai is arguably in the ascendancy. As will be argued below, world clusters are not defined by large international firms located in one place, although it is instructive to cite Knox and Taylor (2005) on the location of international architecture firms, who show London as the dominant location with nearly twice the score from their calculations of New York, with San Francisco, Singapore and Los Angeles following and Tokyo ninth; and, according to ENR data, over the past decade the UK generally has consistently captured 12–13% of the international design market in the built environment (Hetherington, 2008). Attention has also been drawn to detailed design and production information being undertaken in branch offices or outsourced to other practices in low-cost international locations (Tombesi, 2001; Tombesi et al., 2003; see also Chapter 2 by Graham Winch).

The reasons for geographical clusters in the built environment include:

regional and national-level competitive advantages based on world cities as both strong domestic markets and links to global markets;network effects of each location as global financial hubs and skill concentration based upon cultural factors of creativity and communities of practice.

For example, London, as a cluster, was thought to finance, design or project manage up to 25% of global projects (Ive and Winch, 1999). Based upon ENR data (1999), they estimated 19 of the top 200 design professions were located in New York, and 12 were located in London. Therefore, the location of the projects is secondary to the mobilisation of resources to service and realise projects in the world cities and across the globe. Changes in technology and corporate strategy of leading multinationals in this sector tend to increase the proportion of these activities in the world clusters for the built environment, although the pressure to relocate routine activities, especially production information, to lower-cost locations will increase (Ive, c. 2001). This will potentially create discontinuity of service and may dislocate some key skills and could also inhibit knowledge transfer along the labour market chains that is necessary for maintenance and reinvigoration of the competitive advantage in the longer term. Ive states that much of the training and many of the skills are embodied in employees from overseas. This may be an important inhibiting factor to sustaining the competitive advantage of London in the long run without additional indigenous initiative and capacity development, but reinforces such centres as places to gain experience and enhance résumés or curriculum vitae amongst each new generation of professionals.

Evidence of innovation within professional firms, specifically the top 25 cost management consultants, was recently tested for the London cluster. A total range of innovation was present, and collaboration between the practices and service providers to them was found to be significant, although purely confined to very specific areas and organisations. Surprisingly, very few innovations were driven through clients, professional institutions and the influence of competitors (Page et al., 2003), a factor confirmed in revisiting this issue (see Chapter 9 by Stephen Pryke).

The health and future success of these clusters for the built environment is therefore economically dependent upon the following factors:

1. Cluster factors:

The ability of firms to exploit their respective markets.The ability to develop their capacity and competencies through a comprehensive set of integrated networks – project networks, communities of practice and industrial networks, which create links in the cluster yet also linkages beyond the immediate cluster.

2. Regional factors:

The development of the economic, institutional and social infrastructure to support the clusters for the built environment.The maintenance of each cluster as a world city.

These factors are closely related, requiring the institutional bridge-building that adds value to the existing institutional structures, personal networks and discipline networks, including communities of practice (Wenger, 1998). The cluster factors are worked out through a combination of competition in the market, both on the broad scale and amongst themselves, and collaboration. Profitability, market share and other performance measures are all outcomes of successful innovation, application of knowledge and judgement, and other activities that add value. Collaboration is facilitated through networks, professional and trade bodies, as well as through research and higher education institutions. The scope of collaboration is limited within a cluster by the resources available and by market functions. Resource constraints in the market are not the only ones. Competitive advantage from the perspective of the firm is also a limiting factor. Many firms, especially some the internationally prominent consultants, believe that they must protect their market position and knowledge. Competitive advantage is quickly eroded and the lifespan of factors of advantage has been decreasing over recent years, as innovations become generic solutions and later routinised applications. However, the most powerful players are internationalising through organic growth and acquisitions to have a major office in several of the world clusters.

A world cluster does not simply comprise practices undertaking global projects. A wider infrastructure is required beyond these players and the institutional context, including SME consultants, international construction groups, specialist employment agencies, financial institutions and agencies lending in the project/built environment sectors and strategic higher education linkages. High levels of knowledge transfer are needed within practices, between practices, through the employment market, imported from outside and via higher education institutions – see Figure 1.1.

Figure 1.1 The context for a world cluster for the built environment

Size of Professional Practices

Why are built environment professional firms typically smaller than other professional practices, such as law and accountancy? Is it a management or market factor? It is partly a function of market size and demand patterns, but it is also a management issue as will be explored in the next section. As a market, demand is less for the built environment professions than for many other professions, for example medical and accountancy professional services. Demand is also lumpy and subject to greater severity in booms and slumps compared to accountancy and legal services, which experience reasonably high demand levels even in a recession. The effects of boom and slumps are developed further below.

It is also a function of the demands of managing creativity and problem-solving. Management requires shorter spans of control to manage resources, whilst teams need flat structures of intense interaction and knowledge sharing to generate high-quality creative inputs and to lever tacit knowledge in problem-solving for complex tasks and project working in environments of high levels of complexity and uncertainty. This is characterised by the studio model in architecture, which contrasts with the more routinised practices of accountancy where departments and teams are large and management operates with large spans of control, or the more independent and cellular activities of legal firms where work is more self-regulating in management terms. These management dimensions are also developed further below.

Built environment professional practices continue to grow as projects become more complex. Growth occurs both organically and through acquisition. Acquisition achieves economies of scale and scope. Geographical diversification within a discipline and diversification by acquiring specialist areas of expertise as well as by discipline are commonplace. Acquisitions are presented as mergers of practices or takeovers. In practice, all mergers tend to become takeovers as certain cultural norms and management practices emerge as dominant by default if not by design post-merger. Table 1.1 is a snapshot of engineering-related takeovers and mergers reported at the peak of the boom at the upper end of the market in the UK in order to illustrate the prevalence of this type of activity.

Table 1.1 Engineering growth by takeover and merger reported 2007.

Source: New Civil Engineer, 2007.

Acquiring companyAcquired companyAKS Wardtwo civil and engineering practicesAtkinsMSL Engineering and Mantrix AssociatesBay AssociatesSupporta plc (in 2006)Black & VeatchGleesonBlyth and BlythCowan & LinnBuilding Research Establishment (BRE)Building Performance GroupCapita SymondsChurch Lukas and Ruddle Wilkinson ArchitectsGeorge Hutchinson AssociatesLivingston Gunn ProjectsGwynedd ConsultancyGwynedd Council consulting and maintenance services (2006)HyderBettridge Turner, Munich Project, Cresswells Associates and ACLAHill InternationalKnowles (2006)McAdam DesignGeodelft EnvironmentalMott MacDonaldPettitMouchel ParkmanEwan Group, Honagold & Hills and Traffic SupportNolan AssociatesErinaceous GroupRPS GroupBurks Green, Ecos Consulting, Harper Somers O'Sullivan and Thonger Safety AssociatesScott WilsonRoscoe Postle Associates, Ferguson McIlveen, Cameron Taylor Grant DGPStrainstall GroupSoil Dynamics (Malaysia) and The Railway Engineering GroupTPSCarillion's consultancy businessWhite Young GreenAdams Kara Taylor, JC Warnock, Tweeds, Nolan Ryan, Trench Farrow and Farningham McCreadle

Some practices pursue takeovers as a keystone of growth, for example Atkins and Scott Wilson (Table 1.1), and WSP in the UK. Takeovers are particularly pursued towards, and at, the peak of booms. Professional practices are essentially cash generators in financial terms, therefore reserves and liquidity are high as economic growth conditions prevail, provided that owners do not draw down profit and dividends to the maximum limits. Practices may sell to other firms for several reasons, some of the main ones being (i) the succession problem where existing partners or shareholders cannot, or do not want to, buy out principal equity owners as they leave or retire – a particular problem amongst architects (see Chapter 18 by David Stanford); (ii) where partners or directors wish to pay themselves at a premium rate yet want cash injection to survive and go to the next stage of development; (iii) where privately owned companies would rather be acquired by another private organisation rather become a public company for the next growth phase; and (iv) where practices are weak in the market through overstretched management, overextending their financial reach.

Takeovers are not only prevalent at the peak of the market. They commonly occur at the bottom of the slump and into the upturn, as financially strong practices acquire weaker ones in order to build market share. At the time of writing a series of these acquisitions is in train, particularly characterised by large US conglomerate consultant groups acquiring large national and international practices in other locations.

Management Over the Economic Cycle – Booms and Slumps

One of the keys to sound financial management of professional practices is the management of resources against the boom–slump cycle – see Figure 1.2