Event: The AFTL Series: Financial Management
Location: Center for Architecture, 09.22.10
Speakers: Anthony Schirripa, FAIA, IIDA — 2010 President, AIANY
Organizer: AIANY Professional Practice Committee
Focusing on great design will only get a firm so far; the financial side can’t be ignored remarked 2010 AIANY President Anthony Schirripa, FAIA, IIDA, in a recent presentation on financial management. The event kicked off the Architects Fast Track Leadership Series, which includes eight sessions geared to up-and-coming architects preparing to enter the management ranks. The AIA book The Architect’s Handbook of Professional Practice forms the basis for the topics in the series.
Schirripa’s talk helped explain an array of financial concepts and jargon in easy-to-understand terms. He began with an overview of the process of forming a strategic plan based upon “the firm’s needs and wishes for the future.” After creating a strategic plan, “Each year, you should be doing a business plan to help you achieve your strategic goals — and that takes financial planning,” he said. “Business planning enables the firm to chart its course. Lots of firms get into a cycle of reacting to project opportunities, as opposed to planning what kinds of projects you want, who you target,” he added. “Those are important things to plan, not just react to.”
An annual business plan can vary dramatically, but some common ingredients include revenue projection, a staffing plan (defining the size and cost of the staff), an overhead-expense budget, and a profit plan. Since all those components of the business plan are interrelated, they should be developed concurrently, he advised.
Among other nuts-and-bolts financial advice, Schirripa offered mathematical formulas for tasks such as calculating an hourly billing rate, and he recommended ideal percentages of billable hours for various types of employees (85% for most staff, 75% for senior staff, and 50% for principals). Even in today’s competitive market, it’s important to choose projects with care and to charge a reasonable rate, he said. On the other hand, there’s always room for judgment calls in the name of good service and investment in long-term client relationships. One audience member asked: In today’s economy, how can a firm add value for repeat clients without spending more time (and thus money)? Within reason, if a good repeat client needs some help or advice, “I would tell you, spend the time, maintain the value of the relationship,” Schirripa said. “If the client needs something, just do it — because it will come back to you in another way, in another time.”