Module 05B Practice Management PDF

05B. PRACTICE MANAGEMENT Introduction This module discusses the various considerations when establishing a practice and guiding its successful operation. Presenter Melonie Bayl-Smith, Director (NSW ARB 6846, ARBV 19214, BoA TAS 1080) Bijl Architecture Melonie is director and nominated architect o...

05B. PRACTICE MANAGEMENT Introduction This module discusses the various considerations when establishing a practice and guiding its successful operation. Presenter Melonie Bayl-Smith, Director (NSW ARB 6846, ARBV 19214, BoA TAS 1080) Bijl Architecture Melonie is director and nominated architect of Bijl Architecture, an award-winning small practice based in Sydney. Beyond practice, Melonie is well known for her long-term and ongoing involvement in architectural education, professional standards and the registration of architects, contributing to her appointment in 2017 as the AACA NSW State Convenor. In parallel to this, Melonie is presently serving her second term (2019-20) as an Elected Member of the NSW Architects Registration Board. Melonie is presently Co-Chair of the National Committee for Gender Equity and has previously served as an elected NSW Chapter Councillor and on numerous committees addressing issues such as tertiary and continuing education, professional practice, heritage, and advocacy. In 2018 Melonie was named a Fellow of the Australian Institute of Architects, and at the National Achievement Awards in Architecture was awarded the 2018 Paula Whitman Leadership in Gender Equity Prize. Learning outcomes On completion of this module you should be able to: – Identify best practice for an architect, particularly that derived from the codes of conduct – Identify the appropriate business structure for a practice’s circumstances – Understand the opportunities and challenges pertaining to practices at different scales – Understand the different kinds of resources that practices require, including people and practice/project management tools NSCA 2015 Performance Criteria This module relates to the following competencies from the National Standard of Competency for Architects 2015: Practice Management 9.7 Knowledge of legal and regulatory requirements and obligations in regard to architectural practice, practice management and registration as an architect NSCA 2021 Performance Criteria This module relates to the following competencies from the National Standard of Competency for Architects 2021: Practice Management and Professional Conduct 1 PC 1 Comply with the regulatory requirements and obligations pertaining to practice as an architect, including legislation, professional codes of conduct, obligations for continuing professional development and professional indemnity insurance. References Starting a practice https://acumen.architecture.com.au/notepacks/starting-a-practice/ Business structure and planning https://acumen.architecture.com.au/practice/business-structure--planning/ Checklist of project records https://acumen.architecture.com.au/project/project-control/project-records/checklist-of- project-records/ Office administration https://acumen.architecture.com.au/practice/office-administration/ The architect and best practice The management of an architectural practice begins with an understanding of the basic legal requirements for a practice that is engaged in the provision of architectural services. Establishing a practice and the architects’ code of conduct A business must be a registered architect if the word ‘architect’, ‘architects’, ‘architecture’ or similar derivatives are used in the business name. The details of this requirement differ from state to state. For example, in NSW a business must have a nominated architect. In some states, a firm (e.g. a partnership or proprietary limited company) must also register with the relevant board of architects and pay a fee, separate from the registration of the individual architects. Code of conduct: obligations in practice A business owner should ask its employees to always abide by the code of conduct. Best practice is demonstrated by the employer actively supporting CPD attendance and reporting requirements. Ensure that registration numbers and registration status information about oneself, one’s employees and the practice is clear and unambiguous. Code of conduct and ‘best practice’ The various codes of conduct provide an indication of ‘best practice’ in a number of practice management areas. NSW Architects Code of Professional Conduct (as an example) – ‘Best practice’ actions are articulated clearly and provide guidance to all architects – Transparency around actions, interests, process, etc. – Nature of communications – Timeliness with respect to keeping the client informed 2 – Keeping meaningful project records Practice management and code of conduct The various codes of conduct also provide an indication of practice management activities and behaviours that should be put in place. Client dealings – Protect client privacy and confidentiality – Protect client financial details, e.g. credit card details – Manage sensitive documents with care—both hard and soft copy – Respect non-disclosure agreements – Identify privacy needs early, especially where these intersect with future marketing limitations Record keeping – Collect and action design and project information – Good record keeping becomes a protective measure in times of dispute – Important for managing design and scope changes and contract administration – Dovetails with expectations of quality assurance and office management systems – Clients can request to see their project file—important to demonstrate good record keeping Other legal and regulatory obligations – Bankruptcy and criminal offences can affect your registration status, and often require compulsory reporting – Practices must comply with the Corporations Act 2001 regarding the operation of companies, the duties of officers, etc. – Bringing the profession into disrepute, which could result in suspension or being struck off the roll, as well as losing the opportunity to be a member of the Institute and other professional bodies Basics of business Business plan A business plan defines why a business or practice exists, its vision and ethos. A business plan articulates what the business wishes to achieve in both high level and granular terms. It defines what a business will and will not do to achieve its goals. A good plan includes key performance indicators (KPIs) or other measurable targets (e.g. profit, revenue, awards, projects completed, etc.). Business plans are usually updated annually, projecting forward towards a number of timescales simultaneously, e.g. one, two and five years. Business structures Businesses may take one of several legal forms depending on its size, the number of individuals who wish to have a share of the business, and the level of liability those individuals are willing to take on. The Australian Securities & Investments Commission (ASIC), one of a number of government organisations that regulate companies, identifies the following key differences between the main types of business structure. 3  Sole trader Partnership Company Trust Complexity Simple Moderate Complex Highly complex of business structure Cost Low Medium Medium to high High Legal Low Low to medium High Medium obligations Tax Low Low Medium High obligations Separate No No Yes Yes legal entity Liability Unlimited Unlimited Limited Limited (with a corporate trustee) Source: https://asic.gov.au/for-business/small-business/starting-a-small-business/setting-up-a- business-structure/ Key business consultants A practice cannot manage all of its affairs internally. A practice relies on a range of consultants to guide it in maintaining its various obligations. Business management – Bookkeeper – Accountant – Solicitor – Human resources / employment law consultant – Business coach – Information technology consultant Marketing management – Marketing and communications consultant – Graphic designer – Website designer – Photographer 4 Business resources Practices have access to a number of external resources within the community providing additional guidance on maintaining its obligations. A practice also procures its physical resources from numerous other industries. Community resources State business chambers have numerous benefits including advice on employment law, business sentiment, workplace health and safety (WHS) and industrial award updates, and business compliance matters. Physical resources – Premises – Computer and software – Printing equipment – Furniture – Practice library and manuals – Storage Operational costs Practices are subject to a wide array of ongoing costs, including the costs associated with managing people and workplaces, and insurances. Ongoing costs – Wages and superannuation – Insurance – Office expenses – Rent – Travel – Utilities – Lease payments – Memberships and registration – Subscriptions and books – Accounting and legal expenses – Training – Compliance expenses Insurances – Professional indemnity insurance – Public liability insurance – Office contents and business continuity insurance – Workers compensation coverage – Management liability insurance 5 – Travel insurance – Vehicle insurance Fees and profit Practice managers must understand the relationship between fees, costs and profit, and adopt processes for maintaining the balance between these quantities. – Know about fixed and variable costs—what does it cost to open the doors for business every day? – Allow for cost of unbillable work, a necessity for any professional services business – Good time management and tracking required to identify ‘profit leaks’ – Obtain an understanding of where one’s fees sit in relation to architects who offer similar services – Have a clear rationale for the fee structure and how it works for a business – Profit is essential for future planning and investing back into the business Practice models Every scale of practice has its own typical profile, and its own set of opportunities and challenges. Micro to small practice – Sole practitioners or less than five employees – Small project or niche focus – Often quite compact and nimble, physically and operationally – Often less able to run multiple teams as required to service greater number of projects – Greater dependence on the director(s) to undertake significant amount of project work in addition to supervisory and business management tasks – Can find it difficult to afford the cost or time to run more sophisticated management systems which may be required for some project typologies Small to medium practice – Anywhere between five and 50 employees, although many would argue that above 30 employees represents a large practice – Capacity to take on broader range and number of project types – Physically and operationally require more space and structures in place – Can sustain range of expertise including ‘general practitioners’ as well as ‘specialists’ – Can easily form multiple teams to service greater number or complexity of projects – Less dependence on the director(s) to undertake significant project work—more often undertaking supervisory and business management tasks to ‘feed’ the practice and manage practice outputs – Usually running sophisticated management systems required for some project typologies and client types 6 Large to global practice – Usually greater than 50 employees – Capacity to take on broadest range and number of project types, including work outside traditional ‘architectural’ work – Physically and operationally more complex requirements due to being located in multiple jurisdictions – Usually comprise ‘general practitioners’ and ‘specialists’ as well as multidisciplinary practice departments – Can easily form multiple teams to service complex multidisciplinary projects – Directors mostly design leadership and business management tasks to ‘feed’ the practice and manage practice outputs, usually answerable to multiple partners and directors in the business – Always utilise sophisticated management systems, may even design their own Resources in practice Managing a practice means maintaining and implementing a range of processes, many of which are concerned with the implementation and development of the resources (human and non- human) available to a practice. People Responsibilities of the employer – Take care of the humans! – Know the Architects Award and the National Employment Standard published by Fair Work Australia – Obtain advice when unclear of employment obligations – Obtain advice to properly understand the relationship between the office manual, staff policy, office policies, etc. and how these interact with employment agreements – Workplace health and safety (WHS)—necessity seems obvious for site visits, but is equally applicable to the office space and travel – Mental wellbeing equally important—organisations like Beyond Blue, RUOK, ReachOut Australia have information to help employers – Human resources policies will need to cover a broad range of issues including cybersecurity, bullying and respectful relationships, leave applications, overtime, project and risk management, confidentiality and reporting procedures 7 Executing projects well – Clear, open and consistent communications – Consistent recording and management of communications throughout a project – Clear lines of reporting and responsibilities—recognise and respect hierarchies where in place – Quality assurance processes and software used should be compatible and not ‘fight’ or contradict each other – Excessive communication can be highly problematic! CPD—why do it? – Develop employees—invest in them, foster loyalty and grow expertise – Mandatory or ‘strongly suggested’ for maintaining registration (depends on the jurisdiction) – Reinforces professionalism—most professions and many trades require ongoing CPD to maintain licensure – Demonstrates to clients that the architect is acting in their best interests by being ‘up to date’ with an ever-changing industry and professional domain Office manual The office manual is one of the practice manager’s most powerful tools for defining how a practice operates. Office manuals 101 – From Acumen: ‘Implementing appropriate administration systems in an architectural practice provides the basis for an efficient and profitable practice.’ – Procedures and protocols – Sets out templates and document usage – Reinforces lines of reporting and responsibilities – Sets out expectations of quality, deliverables and outputs – May describe specific processes for particular project or client types Office manual content An office manual is not the same as the practice’s quality assurance / quality management system, though they are related. The Acumen note Office administration sets out the following useful headings for an office manual: – 1.0 Business – 2.0 Administration – 3.0 Projects – 4.0 Human resources – 5.0 Information technology – 6.0 Marketing 8 QA processes From Acumen: ‘Quality control is a method for ensuring that all the activities necessary to design, develop and implement a product or service are effective and efficient with respect to the system and its performance. Quality management can be considered to have three main components: quality control, quality assurance, and quality improvement. Quality management is focused not only on product quality, but also the means to achieve it. Quality management therefore uses quality assurance and control of processes as well as products to achieve more consistent quality.’ Project management systems A practice puts in place processes to manage projects effectively and minimise project risks. These processes may be described in the office manual. Office manual, quality assurance and risk management – Checklists and templates – Procedural directives (i.e. how to do something!) – Work flow charts – Processes for checking work – Specific project or client types can trigger additional checks and balances Practice management and project management A number of factors influence the effectiveness of a practice’s management systems – Culture of the practice’s management approach – Legacy of good and bad habits—these exist in every practice – Software preferences and licences – Project scale – Client expectations—current and past – Communications management – Good reinforcement of protocols Concluding summary – Consider the content of your registration board’s code of conduct and look at the requirements of the singular ‘practising architect’ through the lens of ‘best practice’ for managing an architectural practice as a business – Before establishing an architectural practice, understand what it takes to properly manage the business so that it is sustainable and that it supports your architectural and personal ambitions – Adopt the best business structure for your practice, acknowledging the level of risk and scale of business you are willing to take on board – Resource your practice properly, with the right people, systems and business practices to support the vision and activities of the practice 9 Think about the value that becomes embedded in a practice when well-considered systems are in place and are properly used and managed 10