BMA Exam Notes PDF

BUSINESS MANAGEMENT ORGANIZATION COST (depende pa rin sa agreement pag sa Pilipinas) TYPES OF BUSINESS FORM: 1. Sole Proprietorship: 1. Sole Proprietorship...

BUSINESS MANAGEMENT ORGANIZATION COST (depende pa rin sa agreement pag sa Pilipinas) TYPES OF BUSINESS FORM: 1. Sole Proprietorship: 1. Sole Proprietorship a. None applicable a. one owner only and licensed 2. Partnership: 2. Partnership a. amortizable (payable) over 60 a. two or more, also licensed months 3. Corporation 3. Corporation: board of directors, established through a. amortizable (payable) over 60 merits months LIABILITIES: THE PRACTICE 1. Sole Proprietorship 1. Developing a practice a. owner is liable 2. Firm legal structure 2. Partnership 3. Legal Issues a. both but depende sa investment ng 4. Insurance Coverage isa; pag namatay - ma d dissolve, pag nag retire - may agreement THE PRACTICE 3. Corporation - Covers the basic issues involved in a. uses DOLE so wala na yung death developing and running an architecture firm and retirement like partnership - Challenges: BIR FORMS: - Competition 1. Sole Proprietorship - Financial management: work loads a. solo and cash flows 2. Partnership - Risks: there are disputes, problems a. own tax per person - Assets: employees 3. Corporation - Technology a. one income tax because it is already - Economy: economic cycles, prices considered as one entity - Complexity: architectural projects CONTROLS OF THE FIRM: DEVELOPING A PRACTICE 1. Sole Proprietorship: - practice=firm a. owner Why start a firm? 2. Partnership: Ability to realize your own goal a. shred responsibilities, can be agreed Greater ability to balance personal and on business decisions kapag nagka professional lives disagreement More direct relationships between effort and 3. Corporation: recognition for your professional a. board of directors - anonymous vote accomplishments depending on shares or 1 vote 1 More direct relationship between effort and share financial reward Greater control over own destiny, design, FLEXIBILITY and other issues of personal importance 1. Sole Proprietorship: Survival during bad economic times a. no restriction Satisfaction of building your own practice 2. Partnership: Ability to fit into an established organization a. contractual agreement Desire to work with friends, a spouse, or 3. Corporation: other of your own choosing a. legal entity STEPS TO A FINAL DECISION: 5. Supersalesperson 1. Be clear as to why you’re doing it - A few firms got off the ground due in 2. Define the type of firm you want to have large part 3. Set goals for the first year and for the long term 4. Look at successful models and research 6. Sponsor how they succeeded - E.g. Civil engineer needs an 5. Define what special services you will offer architect 6. Decide if you have all the basic capabilities 7. Golden Handshake necessary to succeed, or if you need - Sometimes the architect’s former partners or colleagues employer provides the new firm’s 7. Decide how you will support yourself until initial work the firms is generating an adequate income 8. Spin-off to pay you - Firms break away from established KNOW THE TYPE OF FIRM YOU WANT ones where the new firm members GOALS: have built their reputation, skills, and 1. Survive potential client base 2. Complete X assignments 9. Phoenix 3. Project Sustainability - New young leadership takes over a - 7 TO 10 YEARS MINIMUM TIME FOR declining firm MOST FIRMS TO MATURE 10. Starting Small MODEL TYPES: - Some firms are content to begin by 1. Major Clients as First doing small projects and building on - stage booster rocket that bases - Firm is founded or taken beyond the - Corporations: merits; 1 tax only start-up with support of a single - Cooperatives: votes client willing to gamble on a young - Partnerships: liabilities are based on firm. investments; retirement: may base on 2. House for Mother agreement, inheritance, replacement - Booster rocket comes in the form of a project for a family member or one “There is no good time to start a new firm, only completed using family money. better times” - Build a house for your family (Robert - Earl Flansburgh Venturi) 3. Academic Incubator Triggers - Relies on teaching positions to - Belief that the firm can get work: provide them with the basic income, - cash time, credibility and exposure to lay - time the foundations of a practice - employees 4. Finding a need and filling it - Some firms see an unmet need and 1. Decide whom you want to work with set out to fill it. In the past years, this 2. Decide on start date has included firms that first focused 3. Draw up a business plan on specialties, such as recycling 4. Obtain initial clients and identity historic structures, or smaller 5. Verify that you have met the necessary legal projects in communities not served (license, corporate reg., etc.) enough 6. Choose name  7. Obtain start up capital - Do not hesitate to offer services that you 8. Decide where to locate have not done before, just be prepared to 9. Select Advisors: Legal, Financial, do whatever it takes to do them well Insurances, Genre Business 10. Promote your practice: Call friends Location 11. Set up the office: equipment, a basic - Small firm are launched from the founder’s accounting system etc. home 12. Identify the backup resources: - Bahay ang una mong office Administrative and Technical 13. Begin practice First Client and Marketing Plan - Launch only after BUSINESS PLAN - A vision statement and list of goals for the First budget first year - Start up costs or checklists - A description of the services you intend to offer The Opening - A list of services from which work will come - Give a party and send announcements to all - A budget for the start up costs and for the your family, friends, and past clients first 12 months - An initial cash flow projection to define the initial capital requirement - A list of the support you will need to provide you services at the desired level of quality LEGAL ISSUES AND INSURANCE COVERAGE Partners and Associates NEGLIGENCE - The classic leadership mix for a new firm - often more difficult to determine than unites individuals who in combinations whether a breach of contract has occurrs. have: - New business development skills to 4 ComponentS: (DBCD) get work 1. DUTY - architect must owe a legal duty to - Technical skills to successfully the person making the claim. In other complete at work words, the architect has a legal obligation - Basic Management skills to keep up to do something or refrain from doing the practice solvent something 2. BREACH - the architect fails to perform LAUNCH DATE the duty or does something that should The First Business Plan not have been done - The first vision statement most firms 3. CAUSE - architect’s breach of duty is the changes significantly over time proximate cause of harm to the person - For investors making the claim - How you are able to manage your finances 4. DAMAGE - actual harm or damage must have resulted from the breach Definition of Services - Formulate a clear statement of the services - standard of care SOP practice of architect in you intend to offer implementing contracts with clients - It is also imperative that you offer services that you can deliver well “OWNER-GENERATED AGREEMENTS” Elements of breach of contract action are the: - discusses a systematic approach to (FPBD) evaluating terms in agreements provided by 1. Formation of an agreement owners 2. Performance by one party 3. Breach of the agreement by the other “INSURANCE COVERAGE” party - covers the terminology and the necessary 4. Damages considerations and alternatives when selecting insurance for one’s !rm. Absolutely Essential Terms: whether an agreement is written in the back of the napkin STANDARD OF CARE or consists of long-form agreement, it is - generally defined as what a reasonably absolutely critical that the agreement include a prudent architect would do in the same written summary of the project scope; the time general locale, in the same time frame, frame in which it will be performed and the fee given the same or similar facts and agreement for the project. circumstances. - The architect’s legal responsibilities to a The Project Scope: It is critical to describe client are examined in light of what the scope of work to be accomplished. In reasonably prudent architects would have some instances, it is equally or even more known and done at the time services were critical to describe any exclusion (ex. In performed. some instances the architect does not plan - The standard of care increases the to to be involved in the construction architect’s liability exposure by making administration phase, but the owner may the architect responsible for more than not comprehend that fact) the professional standard requires. The Project Time Frame: Many disputes - Subjective have occurred because the owner and - Architect can expand or raise the architect did not specifically discuss the time standard of care: frame for the project and assume vastly promising a specific project result different parameters for the start and (e.g That the roof or basement will completion dates (and other critical not leak); milestones) of the work. Taking on the contractor’s Project Fees: It is essential that the responsibilities (e.g dictating means architect and owner agree on the type of and methods or designing payment (e.g. lump sum, hourly, not to something that the contractor was exceed,etc.) and the time frames for the required to do as part of a payment (e.g. monthly, one payment at end performance specification) of project, percentage of project completion) Promising a specific supplier performance result (ex. Delivery of - Project Construction Cost: labor and certain materials by a specific date) materials BREACH OF CONTRACT CLAIMS Architectural Services (Marketing) - based upon an allegation that a specific duty or duties existed pursuant to a contract between two parties and one of those parties either failed to perform that duty or did not perform it properly. FIRM, IDENTITY, IMAGE AND EXPERTISE REINFORCING THE REPUTATION IMAGE * Creating apps or computer-based * small firms databases relevant to the typical clients - often closely tied to the public perception of the issues and concerns founding principal as well as a fee of the firm's best * Writing a textbook or articles on the known projects subject * larger firms * Attending and speaking at client-oriented - firm's image may be very different in different conferences locales send to different people * Activities that reinforce the firm’s image as experts in the field. DIVIDE FIRMS INTO FEW CATEGORY * Getting project published or writing article * Design for client publications * Service * Writing articles for client publications -A very unhelpful distinction * Win design awards sponsored by client organizations Most Firms: * Activities that reinforce the firm's image as * approach based on interests, strengths and experts in the field demand of the market etc * Writing articles for client publications * seek to create a positive image for their firms in all * Getting projects published or writing categories articles for client publications * work hard to build strong images as project-type specialists innovators effective project managers OFTEN and valued client partners - overlooked aspect of an architect's image * seek to create a unique image that separates * Reputation for being ethical them from other firms in the market or markets * Responsive to client concerns e.g Slater young and ayala companies * Easy as well as fun to work with * build an image as a firm Client want to like and trust the firm they choose GOOD WORK * rarely enough Design professionals are more likely to recommend * What needs to be done? an architect who they like and trust to clients and Cultivation of the press others who can be helpful in architect's career Published work Entering and winning design awards Participating design activities Pay attention to all of the things that the public and potential clients see: * Office design * Stationery * Brochures * Websites (e.g. WTA Firm- pandemic) MARKETING & BUSINESS DEVELOPMENT - Understanding of marketing goals and objectives and what actions the firm will take to MARKETING STRATEGY build its business - Measuring stick that guides decision making Branding - Attempt to expand their practice - effective means of communication between - Objectives, identity, or branding of your services; conpanies and their customers what’s your positioning - e.g logos etc - With clear and consistent brand, customers will know what to expect and will associate DEVELOPING A MARKETING PLAN "reputation" vs "brand” - a firm should aim to have a marketing plan - reputation: essentially for each of its markets. - Should be no more than a page long, if BUILDING YOUR BRAND possible. - Define your audiences - Get a clear picture of how your firm is perceived 1. THE MARKET - Identify the firm’s message - define the market as precisely as possible in - Determine goes to transmit the firm’s message terms of geography, service, industry, and (marketing as a whole will come into place) facility type. - Make sure your firm “walks the talk” 2. THE MISSION POSITIONING - What do we want to accomplish? - the application of a firm’s brand to a specific - Describe specifically the impact the firm market would like to have in this market. - The process of packaging the company for a - What is the major goal of this marketing specific target market and determining how to plan? What do you want your firm’s position define it relative to the competition in that market. in this market and to be? - “How can we present the firm to this market, and how can we differentiate our firm from the 3. CURRENT POSITION AND CLIENTS BASE competition?” - Who are our clients in this market? - What does your firm offer in this market? - Describe where the firm is right now in this - Why should the firm pursue the market, and how market. will it become a leader in it?” - Is the firm a veteran, an underdog or a - Refers to your audience newcomer? DEVELOPING POSITIONING STATEMENT (it 4. MARKET SIZE AND TRENDS includes GEOGRAPHY) - How big is this market? - What is the market? (Services) - What is changing? - What does the market need? - Do some market research - Who is the competition? - How many projects are there each year in - What do we offer? this market? - Positioning includes geography- it defines your - How profitable are they? positioning - What trends in this market can your firm take advantage of? THE MARKETING PLAN - Provides structure to marketing efforts on a COMPETITORS continuing basis - Which firms is your firm competing against?  - What are their strengths and weaknesses? 4. Value-based selection - What other firms will your firm be positioning - Client gives the architect an opportunity to itself against? provide knowledge - Ethicality ; Work ethic that you have in your POSITIONING previous work - Where do you want your firm to stand in this - Your value as an architect ; How you market? interact with your clients - Have you defined the market in such a way 5. Direct hire that your firm can be the leader in it? 6. New clients 7. Existing clients OBJECTIVES - What can you do to achieve your mission? Marketing - Do you need to do more business - process of bringing new business to a firm development, reach out to existing clients in order to sustain and grow the practice more, or work on media relations? Be as - involves everything that helps to spread the specific as possible here. word about a firm, communicate with - The of the marketing plan prospective RESPONSIBILITIES Marketing Strategy - Spread around responsibility - Everyone involved in this market should Marketing efforts - most successful when they share in the responsibility of fulfilling the mesh with the vision and operations of a firm. plan. (General Responsibility of the firm towards the client, employees, and Firms long-term goals must be clear. workmates to do good work) goals for business growth goals based on design SCHEDULE aspirations(principals and staff) - By what date is each person named supposed to have accomplished his or her Business Plan - good starting point for developing objective? Give them a time frame. a marketing strategy. - Review the plan every month or two check target markets progress, update the plan, and make new financial goals assignments. hiring and staffing strategies - Depends on you 10 Key Questions BUDGET 1 Who are we? - Specific amount for firm’s marketing efforts Key firm leaders must agree on their vision for the in this market firm and its basic identity. - It should include hard costs (printing, What kind of practice is it? networking expenses, etc) and soft costs What do the leaders of the firm (staff time). ——must have Contingencies believe in? What is the firm known for? HOW CLIENTS SELECT ARCHITECTS Is the firm a design-based practice 1. Cost-based selection or is it a specialist practice, expert in 3. Qualifications-based selection the design of a specific facility type? - Portfolio A strategy of specialization, of pursuing - Similarity of your prior work and its quality work in one or just a few markets, can be  incredibly profitable while the targeted Could the firm offer new services, explore market is hot but does not usually enable new geographies, or become expert in the same long-term stability as the designing new facility types? generalist strategy. “What will we be doing in 10 years that we are not When a firm “owns” a market—when it doing now? What opportunities do we need to take becomes the obvious leader in a given area. advantage now to get there?” 2 What markets do we serve? 6 What threats do we face? Key markets should be defined carefully. Factors in the marketplace that could hurt a Markets can be defined by geography, service, firm’s current position. client industry, and facility type. What are competitors doing that threatens the firm’s position in its existing markets? Example Is the firm facing new competitors? “We provide architectural and interior Are there trends in existing markets that design services for academic institutions may negatively affect your firm and its in the Midwest, with a special emphasis business? on dormitory projects.” “What keeps us up at night?” Clear distinction - markets the firm works in now 7. What’s our vision for the firm? and the markets the firm would like to move into. A written expression of the firm’s highest Who is your firm competing against? aspirations. This is the place to use superlatives: Which firms are the most successful? best, leading, largest, most, finest. Make a list of all major competitors, and briefly What is your firm all about? Design? discuss the strengths and weaknesses of each. Innovation? Efficiency? Service? How does the firm’s work improve the lives 3 What are our strengths? of its clients? What is your firm really good at? (design, service, How does the firm change the world for the or some special knowledge or expertise.) better with every project? as concise as Emphasize those that are truly unique possible. to the firm 4 What are our weaknesses? 8 What’s our mission? Be honest about liabilities. More directed than the vision statement. What are the things that your firm does not Where the firm is going do as well as it could? Describes how the firm would like to change List everything that might affect the firm’s its practice in the future. performance (internal + external) Practical and achievable 5 What are our opportunities? “Our mission is to be the most Consider each market in which the firm is active respected laboratory design firm on the and identify opportunities in those markets for West Coast. We intend to accomplish growth this by hiring the best staff, rigorously What’s changing in these markets? improving the quality and accuracy of Are there trends that could be capitalized on our designs, and delivering on our to achieve growth? Promises.” 9 What are our goals? Identify goals that will help your firm accomplish its mission. What does your firm need to do to accomplish its mission? Does the firm need to hire new kinds of staff, modify the design process, look for different kinds of work or make other significant changes in strategy or operations? Who will be responsible for following through with each goal? 10 How do we communicate our strategy? Vital for everyone to understand and participate in the marketing strategy. Marketing strategy summary should be shared to everyone not only with the firm's leaders. Each person should understand his or her role in helping the firm move forward. COVERAGE FOR EXAM: - Developing a practice - Firm legal structure legal issues - Insurance Coverage - Marketing entire discussion