Toon Dreessen: What It’s Worth
In this episode of the podcast series Single Serves, Arnaud Marthouret chats with Toon Dreessen, president of Ottawa-based Architects DCA, about current professional service procurement methods, its problems and potential solutions.
Arnaud Marthouret: Why is the current procurement of professional services model a problem?
Toon Dreessen: I think it is a problem [because] we have this illusion that what we buy we have to equate with getting best value and there’s this belief that best value means lowest price. That might be true if you’re buying a particular product, say, exactly the same sheet of plywood: if you get it for $5 in one place and $6 in another, if all things are equal the $5 one is a better value. But when it comes to professional services, it’s significantly different and what it really comes down to is how do we get things for best value if what we’re doing is forcing people to submit the lowest price.
Price is related to effort and when you’re buying professional services, you’re buying services that create something that has lasting long-term value. If you want a building that is climate responsive, innovative, or has to do a certain thing, then you need to have enough services behind that to come up with those ideas. If you limit the amount of service you limit the amount of innovation and you limit the amount of service by cutting the fee. We architects are in a large part our own worst enemy because I might look at a job and say “the fee is worth $200,” but someone else might come along and say “I’ll do it for a $190.” Then next time I say “Okay, jeez, I lost the last one by 10 bucks. I’m going to lower my fee to $170,” and you keep going and before you know it you’re doing things below cost and it makes the process of getting something interesting unfair to the public because the public doesn’t get the best opportunity to see what I can do.
AM: With professional services intimately tied to creativity and innovation in the field of design and engineering, the less you pay for something the less innovation or creativity you’re going to get. Is that a fair interpretation?
TD: That’s a very fair interpretation. I think that what you’re getting as a result of a low bid fee is low services. But it’s really it’s an illusion because if I bid really low to get the job because the RFP has something unattainable in it or out of my control, like say planning approval, well, I bid low to get the job and then the minute there’s a delay or there’s an out-of-scope change I hit them up for extras and then pretty soon the total of my extras is what the fee would be to do the job fairly. And who loses out on this? The public, because someone has bid low and nailed them with extras to provide something that we should have just had a fair fee to begin with.
AM: Where do you think this commodity mind-set in the provision of professional services comes from? It’s got to come from somewhere. It’s been historically that way for a long time.
TD: Philosophically, I think that this stems from a cultural devaluation of design and the role of design in the built environment. We used to believe that architecture was something that we invested in and cherished and you can see that in the way we used to make buildings. It’s not that architects were on a pedestal but architects were seen as adding value to a project and what’s devolved over the last half century is that we now think of architecture as a commodity, that every architect is the same and every architect can do the same thing.
We were having a meeting with a client group and a whole bunch of architects [were] in the room. And [the client] said “Look, if the top three architects can all meet the same qualifications and are just as good, I’ll take the cheapest.” Well, yeah, you’re going to get the guy who’s going to be the cheapest, you’re going to get the guy who’s going to do the least amount of service up front and is going to find a way to make an extra and is that really the mind-set you want to go into? It’s because people who are doing procurement don’t know what architecture is, what it does and they don’t even understand the legal framework that requires architects to be involved. They just think that architects are just service providers and one is just like another.
AM: How does one convey the inherently uncertain nature of the design process with procurement people who are looking to deal only with certainty?
TD: There’s an illusion today if we think that there’s certainty in the way we’re pricing professional services now because as soon as something changes – as soon as there is a scope change, a schedule change or any kind of change in the process – then architects today are having to go back and say “I need an extra for this thing because that wasn’t in the scope.” There is no certainty today. I think to bring more certainty is to go through a QBS [quality based selection] process. If you wanted to hire me as your architect and you said [you] want an office building, I could go through a QBS process and say to you “Look, I’m going to give you the following services all in, there’s no extras.” And then you would know up front what I’ve allowed for in the project and how I’ve arrived at my fee and know that one hundred percent there’s no uncertainty in it. You could expect exactly the best result because you have my dedication. If you are forcing me to compete with other people, I try to figure out how I could get hired for the best price possible knowing that I’ve got a few things in my back pocket if something doesn’t work out. I’m gonna have to hit you with an extra.
People who are doing procurement don’t know what architecture is.
AM: What can architects and designers do to better demonstrate their value, and maybe integrate that in the procurement process and make sure that this doesn’t get put aside?
TD: I’ve been thinking about this and it’s not easy. Some of the simple ways are things like develop a good reputation for your standards, your quality, your ability to bring something in on time and on budget, and keep your promises. Just like if I went out and I hired somebody and I said “I expect you to work Monday to Friday from 9:00 to 5:00,” and the first week they were 9:00 to 5:00, in the second week they were 10:00 to 4:30, and in the third week they were 11 to 3. I’d kind of go “Hey, we said 9:00 to 5:00. What’s the deal? Why aren’t you doing this?” and you go “Well, I just don’t feel like it anymore,” they would have let you down and you’d be disappointed. [To] architects, when a client says to us “I’ve got a budget of half a million dollars to do this tenant fit up.” Then you work hard to bring it in at half a million dollars and when they say [they] want it to be occupied by June 1st you say to them right up front “Okay. You want to occupy June 1st. You need six weeks for construction. That’s May 15th. You need two weeks for permits. That’s May 1st. So here we are: May 1st. I’ve got one day to do all the design. Do you think that’s fair?” You could have that conversation, negotiate and be honest with them and say “Look, I don’t think that your budget is achievable. I don’t think your schedule is achievable,” and you’re honest with your client. You tell them the truth. They want to hear that. You might not get the job, but they need to hear the truth and they don’t want to be lied to. I think that’s a really important part of it.
AM: Why do you think the architecture, design and construction industry is so accepting of procurement as it currently is instead of rebelling and saying “To hell with your stupid requirements. This doesn’t make any sense and we’re going to help you procure our services in a way that is fair for everyone.”?
TD: That’s a really tough one. I mean a big part of it is that it’s the only game in town [and] everybody is playing the same game. All the procurement departments are using the same models. No one’s willing to stick their neck out and choose to do things differently. It’s the only game in town. So whether it’s school boards or community centers or cities or municipalities or colleges or universities or provincial government or federal government, everybody’s doing it the same way. Edmonton and Québec are the only places where things have changed. What they’re doing there is something that’s much more in a QBS kind of a model and what they’re basically saying in Edmonton is “We’re going to qualify a shortlist of people, we’re going to ask that those people do a design or compete for the work but whatever the competition process is, this is the fee we’re going to pay and we’re going to pay this fee plus or minus a couple of per cent and you have to justify why but that’s what we’re going to pay.” And that puts everybody in a level playing field because now you know what the rates are going to be. So you can calculate from that going in and you know what you’re going to have to do and how you’re going to do it. You don’t have to think about what the right way is to get the job. All you have to do is think about how to do the best design you can within a very fair and transparent fee.
We really do a disservice to future generations because we have a flawed procurement model.
AM: Is there a legal mandate to have the procurement process as it is? Or is it just done that way because it’s always been that way and nobody is willing to try new things?
TD: There’s no legal mandate to do that and it’s actually kind of interesting that the model is what it is. A number of years ago the federal government partnered with the Federation of Canadian Municipalities on an infrastructure purchasing guide and there was research done and everybody kind of bought into this process that said that quality based selection is the best way to do procurement, and then the federal government said “Oh, that’s great,” and put it on a shelf and don’t use it. There’s different ways of doing procurement: the way it is right now the federal government usually does a two-envelope system where your second envelope is price and price is only worth 10 per cent of the score. But no one else is really doing QBS the way it should be done with the exception of a few isolated school boards here and there. A lot of people say, “Oh we use quality based selection because fee is only 30 per cent of our score.” Well, 30 per cent is still a hell of a lot. Even if it’s one per cent of your score, it can really affect the decision of who gets the job. If you were to line up the three best lawyers in Canada and you put them in a row and said “I want one of the three of you to do this job and defend me in court,” who’s going to do the job? Do you think you’re really going to get one of the three best lawyers in Canada who’s going to undercut the other two for a lower price? You’re going to pay the service for what it’s worth. Are you going to really haggle about it? That’s the flip side to this people don’t really understand: my services represent less than one per cent of the total life cycle cost and value of a project, and my effort can affect 80 per cent of the lifecycle value of a project in terms of its operating cost, its maintenance, the quality of life for people in the building, the productivity of the people in it. What I do has a massive impact on the end result and lasts for generations. If I turn to you and said “I can give you a building the never has a utility bill because it’s Net Zero, or my building can cut the number of sick days of your staff down to 10 per cent because it’s a better building environment with better natural light and more productivity,” that’s worth something. So, why would you cut my fee that cuts your ability to have a better business?
AM: Can you speak to what your ideal vision of procurement would be and how that would work?
TD: My ideal vision of procurement would be a fair and transparent quality based process that has room within it for outliers, for people who have never done that type of project before or who are new to the profession but have great ideas, as a way of broadening the profession so that everybody can succeed. I’m not saying that there needs to be like some kind of a socialist network where work is handed out to every person in equal measure, but if you’re going to create a building that has lasting value for a community, instead of just looking at people who have done the same thing before and those are the only people you are going to consider, open the market to new ideas and create a model in which everybody can compete fairly and transparently to get the best value. I think that we really do a disservice to ourselves in Canada by undermining our procurement model by assessing quality in such a poor way. We reward firms and people who bid low, who do the same ol’ same ol’, who don’t bring innovations to ideas that we need to create really important architecture and engineering and [infrastructure]: we really do a disservice to future generations because we have a flawed procurement model.
AM: This leads to subpar buildings which cost more to maintain because of all sorts of problems down the road. While it’s a bit beyond our respective reach — I mean we can advocate for it and we can keep spreading the word and I think that’s a great way to start — but what do you think would need to happen at a societal level for that mentality to change in procurement to significantly move in the right direction?
TD: I think that if the public had a better understanding of the role of architecture within their lives, if they understood a little bit better that what an architect could do is make their bike route home a little safer or a little bit more beautiful and that if an architect made their grocery store more interesting or more innovative or use less energy, or if their home was a little bit nicer designed and could save them money, that all of these things has something to do with architecture, because architecture affects every one of us every day. I think that if the public understood the role of architecture and engineering in a better way, they’d have a stronger appreciation for it and might turn around and start agitating for a better built environment, and if they agitate to politicians who make these decisions we might see change.