September 2014

Technology and the Commoditization of A/E Services


Guest author George Melchior, R.A., P.E., LEED AP BD+C, Consultant, offers an analysis of how technology  has affected the A/E industry for the past 35 years.  This edited excerpt first appeared as a feature article in PSMJ, May 2014. 

"That will require some changes to the model."

Such production-centric feedback is becoming all too frequent during design collaboration.  As A/E firms focus more on the efforts associated with the development of technical products, they are losing sight of the client's performance goals.  This is the consequence of the industry's myopic focus on productivity gains realized from the incorporation of technology, and the associated product delivery mindset that has taken root.  If this trend continues, the industry's over-dependence on technology will erode value proposition and commoditize the profession.

There is no question that technology has been instrumental in the advancement of the A/E industry.  Initial adoption of computer-aided drafting tools in the 80s allowed the industry to service an unprecedented development boom.

However, it was technology's role through the 90s that solidified its place in the design practice: 

          In the late 80s and early 90s, productivity for the industry
          spiked at an annualized rate of 2.7% as designers fought for
          survival after the Savings and Loan bubble burst.

          By 1991, hundreds of firms had closed their doors.  Those
          remaining had cut deep into their staffs, with
          architects absorbing the brunt of the contraction. 

          To survive, the recession-era A/E industry became highly
          dependent on technology as a means to suppress cost and
          remain relevant. 

The industry's widespread adoption of technology induced a shift in business emphasis toward efficiency and expediency.  Today, the average firm dedicates a disproportionately large amount of design time towards the development of tangible deliverables.  This product-delivery focus has caused A/E firms to lose sight of their value proposition as a professional service provider:  the specific, real-time application of a discrete body of knowledge.  An A/E firm's value proposition is measured more on intangibles such as professional credence, and quality of the experience, rather than their production aptitude. 

The industry must shift its emphasis back to that of a professional service provider.  Specifically, A/E firms must labor to create compelling experiences for their clients.  Though technology has a place in this endeavor, the root of the effort is application of professional knowledge toward clients' goals. 

Creating compelling experiences will be challenging, because quality control must happen at the point of service, in real time, which requires thoughtful and deliberate accuracy, adequacy and application of knowledge.  Other professional service sectors, such as the legal profession, successfully create compelling experiences for their clients, and even do so with minimal reliance on technology. 

Because compelling experiences are best facilitated by differentiation in the marketplace, the A/E industry's value proposition is most evident in the nation's innovative metropolitan areas.  For example these same metropolitan areas are national leaders in education, sustainability and health.  According to the Bureau of Labor Statistics, these regions also boast more designers, per capita, than other metropolitan regions in the U.S.  This correlation between sophisticated markets and higher employment in A/E services reinforces the knowledge-based value proposition of the industry. 

Today, the A/E industry appears to be placing more emphasis on the application of technology through an established product delivery business model.  However, the future of the industry requires architects and engineers to shift this emphasis back to the creation of compelling client experiences, or the profession will become commodity, and ultimately, irrelevant.  

George's comments do emphasize how instrumental technology has been for the advancement of the A/E industry.  Technology does provide a time and cost savings solution for secure credentials management.  We are not talking about spreadsheets here.....  Visit AECredentialing.com to learn how this proven technology will save you time and money for credentials management.  Just think, you can return to creating quality client experiences. 


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