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Downs Variava was initially established 40 years ago by Sydney Downs and focused primarily on Housing. After a successful first decade during which the practice grew to a size of 40 employees, the boom in housing work dried up overnight and the practice sank back down to 2 people. Today, the practice is run by 3 partners and has 26 staff and are careful to be involved with a mix of projects so as not to be over-reliant on one specialized field which had caused serious problems before. This is illustrated by the list of current projects:
The practice uses 'Practice Profiles' to attract work. The are tailored to suit particular clients, and particular schemes. They can include staff qualifications, fee turnover, health and safety documentation computing facilities, name of Bank Manager and consultants. Staff The practice is accredited under the Investors In People scheme which helps with tracking a growth in skills and training amongst staff members.When new people are employed, they are allocated a 'buddy' within the practice introduce them to the work and are generally given a contract of work after 6 months providing for pensions, sick leave and holidays. The contracted working week is 37.5hrs and can be worked on a flextime basis. All staff take part in a 'Personal Development Plan' the RIBA CPD requirements which Mr Hickey likened to under taking a part 4, part 5 and part 6 are you career progresses. Business Plans After several years in practice, the Bank insisted they produce a business plan to give an idea of cash flow and turnover in the future and to help asses risk. The practice now produce a business plan which is reviewed every 5 years and sets targets for growth, staffing, turnover. The current plan, reviewed three years ago, set the target of achieving a turnover of £1.25m as this was the level at which the current office at the Towers would be optimum utilizations in terms of staffing levels. All the objective of this plan have now been achieve ("by hook or by crook") and the practice has increased it's turnover by £500k in two years to £1.25m. Funding a Business Mr Hickey went to to give an interesting explanation of the problem of cash flow while running the practice. As most of the expenditure by the practice is made in the earlier stages of a project, before the majority of fees have come in, the practice must have enough cash available during the interim period to cover the shortfall. For example, on a £2m job with 10% fees, a deficit in the early period of the contract might run to £40k before eventually showing the £20k profit at the end of the contract. The practice requires approximately£600k in funds to cover cost deficits and this comes from three sources:
Cash not Profit Mr Hickey thus explained that it is not ultimately profit which drives the business, but cash flow. The business must never run out of cash, or it will go out of business. Therefore cash management is the key to the whole business, especially in times of growth. An analysis of three types of of contract shows that traditional contracts lead to the most exposure in terms of cash flow, but reasonable profit levels at the end, whereas a design and build contract has less exposure and can often lead to high profitability on a similar project with similar fee. Practice Value Using a 'Practice Value Funnel' diagram, Mr Hickey explained that there were many aspects that make up assets of the practice. At the bottom of the funnel is profit, and working up the funnel we find
The total value equates to somewhere in the region of £2m. However, this figure can never really be realised by the partners although there are means of selling the value on to younger members in the practice. Profitability To ensure smooth running of the financial side of the practice, regular cash flow projections are produced, as the cash flow can vary quite markedly from month to month. Half of the cost of running the practice is staff cost, and another third is overheads. On a £100k project they might aim for a retained profit of 8 or 9% which compares very unfavorably to a building company who could achieve a 3 to 5% profit on a £20m project. Thus the builder will make 4 times as much profit from the job as the architect, an illustration of how different business structures have very different profitability. Conclusion In concluding his Lecture Mr Hickey agreed with the maxim that architecture is a "Great Vocation, but an awful business". However, he foresees changes within the profession in the future. "The time for small practices is nearing it's close" and " the title 'architect' is diminishing all the time" were two of his statements. He also went on to illustrate how architects effectively earn 50% less from similar projects as they would have done 25 years ago. This is not a sustainable situation and as architecture students we must learn to diversify the skills that we possess in order to survive and thrive. |
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Gateway Tower
will have the UK's largest TV screen  Gateway
Tower on Piccadilly Station Approach 
The Great Hall in The Cornerstone at Hope at Everton
 Ladybarn
House student accommodation for the University of Manchester
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