Portland State University (PSU) Development News

[mcbaby]

i wonder if the winning design will incorporate a green roof?

[anp]

One other observation: The proposals for this project seem to be well into the schematic design phase, which is necessary for getting fairly accurate pricing. One would normally expect that a client would hire an architect and pay him/her to develop the design to this level of detail. Thus Gragg's statement that PSU is asking for "a lot of free work."

[awg]

I know I am being kind of argumentitive here but that line that Gragg had saying/implying that the firms "spent" $200k and that the school should be paying those costs just got to me.

I'll stop commandeering the conversation after this but one last thought:

When I was in school, like many of my friends, I had the good fortune of landing an intern gig at an architecture office. I was, unfortunately, rather ignorant about the expenses of running a company. When I found out what I was being billed at relative to what I was being paid, I was miffed. I mean, how could a company charge 3 or 4 times my hourly rate?!? It seemed abusive. So I asked questions. Most companies are more than happy to talk about how they make money and how they lose money--its in their best interest. After getting a little taste of how it works, I started to read other articles and books about business management and continued asking questions. Though there are a lot of direct ways a comany can spend money (salary, health care, rent, etc.) its a pretty simple to understand how it works: make enough money to pay the bills you have. If you make more than that, great, sock it away for a more difficult year and spread with the employees that helped generate it.

If there is one thing I am disappointed in my architectural education, it was the lack of business preparation--particularly since the schooling I had was so focussed on design and the assumption that after getting out of school we all could simply join the profession, open up shop, and make buildings. It is an uncommon set of cirmumstances that would allow that to happen (combination of money, luck, knowledge, and jobs to do).

However, I'm still a little confused with the idea that the school wouldn't pay the losing firms fees. Why wouldn't they? Whether the school chooses their scheme is immaterial. It would be like going to three different doctors, getting three different opinions, and having three sets of diagnostic tests done. Then, as the patient, taking one doctor's prognosis and not paying for the others.

[Urbanpdx]

But the work isn't done for free. If it is good enough it might result in a job. It is a gamble. If Apple builds thousands of I-phones and everyone chooses a Nokia Apple loses but if the Apple design is awsome and the price is right, they get the sale and Nokia loses. Same thing here. Do you think Apple buyers should have to pay Nokia something for their efforts, after all they did a "lot of free work" to give you something to compare to the Apple...

[anp]

Originally Posted by Urbanpdx

But the work isn't done for free. If it is good enough it might result in a job. It is a gamble. If Apple builds thousands of I-phones and everyone chooses a Nokia Apple loses but if the Apple design is awsome and the price is right, they get the sale and Nokia loses. Same thing here. Do you think Apple buyers should have to pay Nokia something for their efforts, after all they did a "lot of free work" to give you something to compare to the Apple...

Well, not exactly the same thing. A building like this is a custom design built for one client, and normally the client pays an architect to do schematic design. In all jobs I've worked on, the client pays for this service. Sure, our firm has to invest a good amount of time and money to present our ideas and to get the job, and it's always a gamble. I don't think anyone is saying that all expenses of the architect should be paid. It's just a matter of where you draw the line.

[urbanlife]

I have always heard our urban planning program was one of the best. I have had a couple BA classes in it and like it. But beyond that, that is all I know.

[Urbanpdx]

Did anyone force those firms into the competition or did they feel the risk justified the possible reward?

[Urbanpdx]

What do you want to be when you grow up? (don't take this as a dis, seriously...)

[Drmyeyes]

anp and awg, thanks for these very enlightening and patient responses to questions posed about the realities involved for firms that want and need to take a shot, if they can afford to, at the kind of very important project that a building such as the future PSU Rec Center represents.

It's fairly easy to manage a general understanding of why laisser faire risks not producing very good results in the commission of particularly important buildings. Understanding how a firms costs add up is more difficult, so your comments are really appreciated.

[awg]

Did anyone force those firms into the competition or did they feel the risk justified the possible reward?

Undoubtedly they all 3 felt that the risk justified the possible reward. Its a winning situation for the owner and a losing situation for at least 2 of the firms and potentially all three if the project were to disintegrate completely and the work was never carried forward. The client (PSU) in this instance is getting $600,000 (by Randy Gragg's estimate of $200k x 3 firms) worth of work for $75,000 (the cost 2nd place).

However, I am fascinated by your position on this. I have made the assumption--rightly or wrongly--that you are a student of architecture at PSU. I am also assuming that one day you will graduate with a degree from PSU. At that point, if you decide to continue a career in architecture, you will in all likelihood need to go on to another post-graduate program so that you can inevitably be a licensed architect (as PSU's program is non-accredited). At this point you will have put in 7 years of study into your profession at, I don't know, let's say $15k a year x 7 = $100,000 investment. Hopefully you will not be strapped down with a huge amount of college debt as a result of this, but statistically I believe the average today is about $40,000 - $60,000 of debt. At this point, you've got to get a job to cover your bills and, for the sake of my little example here, lets assume there are two jobs: one that routeinley chases these kinds of projects and pays $14 an hour and one that decides to forgo the gamble and pays $20 an hour.

You are absolutely right that firms have the luxury of chasing whatever projects they want. However, I'm having a hard time getting to a place where people in the profession or looking to get into the profession would be advocating a system that results in architects getting paid diddly squat for their work. I just don't get it. For all the railing on capitalism and the big corporate machine I read on this site, the kind of argument you are proposing (its a free world, let the market dictate) is exactly that.

[awg]

By the way, I think capitalism is a good thing. And I don't have any problems with corporations--I think the corporations ought to be judged by the positive and negative results of whatever work they are involved with: be it coca-cola, apple, or take your pick of any smaller size corporation. The idea that the structure of corporations are responsible for any number of societies ills, I find ludicrous. In every corporation there are a group of people that make the final decisions--it is not the "corporation" per se, but individuals. Sure, they have fiduciary responsibilities to their shareholders, but that doesn't absolve them from the decisions they are making. And, yes, I know realize I am way way off topic. Whoops, sorry about that. Back to PSU Rec center....

[zilfondel]

Nike paid Oregon $30 in corporate taxes last year.

[zilfondel]

Urban planning is supposed to be in the top 10, with an especially good community development program. We've got some good professors from whom I've met.

[65MAX]

Interesting, but considering the thousands of high-paying jobs Nike has created here, and the billions of dollars Nike has invested in Washington County and Eugene (UO), and the fact that this is an Oregon-born Fortune 500 company (our only remaining F500 co.), I don't have a problem with that. Their contribution to our local economy has been phenomenal.

[Urbanpdx]

Originally Posted by awg

Undoubtedly they all 3 felt that the risk justified the possible reward. Its a winning situation for the owner and a losing situation for at least 2 of the firms and potentially all three if the project were to disintegrate completely and the work was never carried forward. The client (PSU) in this instance is getting $600,000 (by Randy Gragg's estimate of $200k x 3 firms) worth of work for $75,000 (the cost 2nd place).

However, I am fascinated by your position on this. I have made the assumption--rightly or wrongly--that you are a student of architecture at PSU. I am also assuming that one day you will graduate with a degree from PSU. At that point, if you decide to continue a career in architecture, you will in all likelihood need to go on to another post-graduate program so that you can inevitably be a licensed architect (as PSU's program is non-accredited). At this point you will have put in 7 years of study into your profession at, I don't know, let's say $15k a year x 7 = $100,000 investment. Hopefully you will not be strapped down with a huge amount of college debt as a result of this, but statistically I believe the average today is about $40,000 - $60,000 of debt. At this point, you've got to get a job to cover your bills and, for the sake of my little example here, lets assume there are two jobs: one that routeinley chases these kinds of projects and pays $14 an hour and one that decides to forgo the gamble and pays $20 an hour.

You are absolutely right that firms have the luxury of chasing whatever projects they want. However, I'm having a hard time getting to a place where people in the profession or looking to get into the profession would be advocating a system that results in architects getting paid diddly squat for their work. I just don't get it. For all the railing on capitalism and the big corporate machine I read on this site, the kind of argument you are proposing (its a free world, let the market dictate) is exactly that.

Incorrect assumption but the argument you are making is that Architects have made irrational decisions to get into the field and then want to somehow make up for it later? I don't blame design firms for wanting to maximize their fees, I just have always had difficulty with professional firms and their billing. They seem to want to be in business but want to act more like employees. They want the client to remove all risk and even charge extra when the receive a fax or make a copy or a long distance call.

[Urbanpdx]

Originally Posted by zilfondel

Nike paid Oregon $30 in corporate taxes last year.

That is $30 too much if you ask me. No matter how hard government tries, it is impossible to tax corporations. Sure they write checks but the real burden is still borne by people. They may be shareholders whose 401K's don't grow as fast as they might, employees who earn less or customers who pay more, but these "taxpayers" are still us. Corporations are simply groups of people producing goods and services for other people.

Corporations are not tax payers, they are tax collectors for those three groups. Corporate taxes are a shotgun approach to tax these three groups (employees, owners and customers) as there is no way of knowing how those groups will split the costs. If you want to tax customers do you know who they are? Are they welfare mothers buying formula or diapers? If you want to tax employees do you know how they are? Are they miniumum wage earners? If you simply want to tax people who own companies and create jobs then heap on taxes for the rich (remembering that a poor person has never signed your paycheck) because over half of the people in America own stock and you might be taxing a grandmother living on a small pension.

So, how about that Rec Center?

[anp]

Originally Posted by Urbanpdx

Did anyone force those firms into the competition or did they feel the risk justified the possible reward?

Originally Posted by Urbanpdx

I don't blame design firms for wanting to maximize their fees, I just have always had difficulty with professional firms and their billing. They seem to want to be in business but want to act more like employees. They want the client to remove all risk and even charge extra when the receive a fax or make a copy or a long distance call.

Obviously, the firms that submitted proposals were willing to take the risk and knew what they were getting into. This brings us back to Randy Gragg's point, which basically is that this approach severely limits the number of firms that can participate (how many firms have deep enough pockets to provide that much uncompensated time?), and therefore constrains the design possibilities. Yes, restricting participation may have been purposeful on the part of PSU to achieve their goal of having an economical project, but Gragg is a design critic, and, as a design critic, he is right to point out that this approach is probably detrimental to achieving a great design.

As somebody who is in practice, I can say definitively that architecture firms take financial risks ALL THE TIME. Any job compensated by a lump-sum fee is a significant risk (and most of our jobs are billed this way now). At my firm, we've made money and lost money on these types of jobs. Why shouldn't a firm charge for actual expenses incurred for phone calls, repro/copying, travel, etc.? I think most of our clients would rather do this than have us pad our fee to cover expenses that are unknown at the outset. We ususally include an extimated expense budget with the fee proposal. Besides, how is this different from other professions providing professional services? Doctors, lawyers, accountants, consultants - who DOESN'T charge for these things? You pay for them one way or another - either as actual expenses or through increased overhead charges. Why not make these expenses transparent to the client?

[Urbanpdx]

That is my point, it isn't just architects. Just because they all do it doesn't make it right. Why do professionals charge for this stuff? If you go to Starbuck and order a coffee for $2 do you think they should charge extra for the cream, the cup, the lid, the straw, the dishwasher, etc? I would way rather pay a higher fee than pay $1 per page for an "outgoing fax". What does an "outgoing fax" cost anyway?

When you say you "lost money" on some jobs does that mean you didn't get your biling rate or you didn't cover your actual costs on the job?

I agree with your desing comments pertaining to Gragg, by the way.

[anp]

Originally Posted by Urbanpdx

That is my point, it isn't just architects. Just because they all do it doesn't make it right. Why do professionals charge for this stuff? If you go to Starbuck and order a coffee for $2 do you think they should charge extra for the cream, the cup, the lid, the straw, the dishwasher, etc? I would way rather pay a higher fee than pay $1 per page for an "outgoing fax". What does an "outgoing fax" cost anyway?

I think expenses are not always easy to predict, depending on the job and the client. That said, I can agree that most people don't want to feel nickeled and dimed by charges that seem out of line with the product/service received.

Originally Posted by Urbanpdx

When you say you "lost money" on some jobs does that mean you didn't get your biling rate or you didn't cover your actual costs on the job?

We've had several jobs in which staff hours significantly exceeded the budgeted time upon which the fee was based. On the most recent of these jobs, the client needed a lot of hand-holding, and the contractor exceeded the planned construction duration by more that 2 months.

Originally Posted by Urbanpdx

I agree with your desing comments pertaining to Gragg, by the way.

I'm glad we can agree on something! Thanks!

[awg]

I would way rather pay a higher fee than pay $1 per page for an "outgoing fax". What does an "outgoing fax" cost anyway?

Add up all these costs (whatever they may be):

- The cost of the fax machine divided by the usage of it before it needs to be replaced
- The cost of repairing the fax machine during its life
- The cost of the paper the fax is sent on (or)
- The cost of the paper the fax is received on
- A prorated cost of the phone line service the machine uses

and probably the biggest expense of all

- The cost of an individual walking over to the machine to send or retrieve the fax (if you figure this person has hard costs to the company of $50 hour for their salary, their health benefits, their retirement, the computer they sit at, blah blah blah and it takes them 2 minutes to do this = $1.67)