1.0 - Company Profile.
RD Architects is a small and developing architectural practice based in London towards working on the international level. RD Architects will specialize in planning, design, documentation and construction administration whilst being a sustainably focused practice (green building) and Building Information Modelling (BIM).
At RD Architects, we take the approach that a practice, which addresses context, creates its own culture and environment. Our practice does not confine to a singular architectural style but are expressions of the diverse minds within the office. The practice envisions the exploration of architecture in various fields of specialization. Our practice is committed to create innovative, workable solutions in response to the unique characteristic of each project. In the future, RD Architects plans to expand the capabilities in the field of Master planning, Interior Architecture, as well as exploring Industrial and Commercial Product Design.
2.0 – Proposed Business Model.
I am suggesting to form a Limited Liability Partnership (LLP) as a step for the practice to take shape and operate as a fully defined legally entity in which the characteristics and benefits of Limited Liability Company and Partnership can be experienced.
According to the Eight Edition of RIBA Architect’s Handbook of Practice Management, the LLP can be run like partnership in the sense of having the complete freedom of internal organization. By having this business model, the practice becomes a separate legal entity distinct from its members which mainly revolves around the purpose of UK income tax and capital gains tax. Furthermore, LLP’s are easy to set up, low cost of formation and flexible.
This form of practice puts us under the governance of Limited Liability Partnership Act 200
Liability is Personal LLP are becoming an increasingly a famous structure to operate within new smaller architectural firms and it is the third most popular in the UK with around 10% of firms using this structure model. LLP is suitable for this business because it encourage our members to take an active role in the management. The members of the LLP will not be attached and severally liable in the normal structure of the practice, meaning our liability only applies and limited to our respective agreement in the partnership. Thus, in the absence of fraud and illegitimate trading in the business, members cannot lose more than what they have invested into the business. In the event of an ordinary business failure, the developer client would only be liable to the amount that has been invested into the business. However, all the protections offered are subject to exceptions if the LLP undergoes an insolvent liquidation. Transparency in Tax. The tax rules for an LLP are the same as the general partnership in respect to UK income tax and capital gain tax. The members have to pay self-employed tax and each partner will report their share of the profit on their personal tax return. LLP is look upon as a transparent for tax purposes, therefore giving the practice the chance to benefit limited liability whilst removing the hidden of tax encountered when operating a business through a limited company. A comparison is made with Limited Company (LC) business model in order to further acknowledge the suitability of LLP as our business model. Limited Company
Limited Liability Partnership
Retained profits taxed up to 24%
Retained Profits saved taxed up to 50% plus 2% NIC
Distributed Profits subject to additional income tax
No further tax on distributed profits
Employers NIC of 13.8% on salaries paid to shareholder employees
No employees NIC
Chargeable company gives taxed up to 24%
Chargeable LLP gains taxed on members 1028% , ignoring annual exemption.
Losses can only be used within company against certain profits
Losses made can be set against other taxable income with restrictions on the amount allowed to be set off
More restrictive when charging profit allocation between shareholders
Flexible when charging income or capital profit sharing ratios
3.0 Business plan Marketing and business outline An outline business plan is necessary to lay out reason of starting up a business practice. An important methodology such the layout of the plan for business marketing is applied as part of the business outline. It is essential to phase out marketing strategies into stages in order to achieve the goals for our business development. Stage 1 : Knowing where the Business Stands To identify in which level the company stands, SWOT analysis carried out. SWOT Analysis looks at the strength, weakness, opportunity and threats of MOD in its initial set up. It highlights the strength and weaknesses of the practice that will help to identify the points where should the practice need to improve and what must it sustain. Whereas, the opportunity and threats will appear once the practice is set up. It will be consider and help the practices ability to survive and develop to become a better practice in the future.
Stage 2 : Setting the Target and Implementation Setting target for our business will guide to offset us from the identified initial position. The objectives that is set for the business must be agreed between partners so that the right objectives will be achieved for the business. The “SMART� Rule can help to assist in setting the goal and matched with achievability based on the resources available. The SMART rule will also emphasis on realistic dimension while being specific with time factor. Implementing is an important step for the business in order to achieve the targets. Regular entries in competitions will indirectly act as an advertisement for our business which helps us to earn the necessary publicity in which we can display our strength and visions as well as establishing networking that will strengthen our business which will lead us to developing new business opportunities. We must also priorities and manage our relationship with clients especially in approaching and communicating.
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SMART RULE objectives : Market led objective, Setting and concise goals
2Promoting the business : Competitions, Tendering and Networking (based on RIBA Codes of Professional Conducts regarding self-promotion) 3-
Relationship with clients
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Branding and advertising
Stage 3 : Reviewing Achievements
At the end of the marketing outline, it is essential to review the practice’s achievements, progress and failure in terms of workload, staffing and financial commitment. Financial management An establish financial system a very important thing to consider when managing a business finance, which it will covers the long term financial target, annual budget and also the short term demands and forecast. Report of finance will be monitor and record at a daily basis, weekly, monthly and annually to ensure firm’s financial status. It is advisable that the financial flow is managed by using single accounting software besides the usual practice of using timesheets for staff.
I would recommend that our practice should keep all the records of financial performance in which we can measure our progress and development over time. Application to the practice of income by fee earner, turnover by group, profits by fee earner and group as the key financial performance indicator will help with long term business planning as well as identifying the types of work that would be financially beneficial to our practice and is best monitored as project based costing system.
Risk Management and Insurance. Architecture Practices are required by law and the Code of Professional Conduct to maintain and keep a Professional Indemnity (PI) insurance that can help to prevent major damages from happening to the practice in case there is any claim against our practice. To identify potential risk element at the early stage is an important approach as part of risk management plans that should be updated and reviewed annually.
Client Related Risk We should prepare and complete a basic paperwork with clients before starting works and projects in order to prevent any possibility of not getting paid. I believe it is best to be professional and carry out formal approach where the client’s profile could be studied and acknowledge.
Project Related Risk To reduce any project related risk, we should establish an archive and documentation system in our practice, so that we are able to keep clear record of project documents of past and present projects in terms of the services that we agree to provide as compared to what was stated in the contract. It is important for us to review the documents of our production before handing over to other consultants and client.
Resource Related Risk It is our responsible to ensure that our practice have adequate skills and resources that can match with the quantity and quality targeted for a new job.
Unusual Related Risk Unusual related risk often happens to ordinary business such as energy failure and computer crashers. Therefore, I would suggest to introduce a clear guidance and rules as it best to for the practice to have physical and hardware backup of every files related to the practice.
4.0 Staffing Resource plan and the implementation of BIM
Staffing resource plan Considering the level of the business as a new architecture practice as well as the size of the secured project, it is advisable for the practice to run in a small team of staff for a short term before the expansion of the practice that can be achieve. There should be the application of business structure to the practice where it consists of director, administration, architect and assistant architects.
There will be an administrative employee who will be fully in charge on the administration sector of the practice. They will report directly to the directors. Under the directors there will be an architect who preferably will have adequate experience in working in related field such design, documentation, sustainability and BIM. He will then have a team consisting of architectural technician and assistants to support the architect.
This small team should be sufficient for the current project and any future projects for the short term provided that supervision by the directors on the projects and its scale are carried out to find whether it is necessary to hire more staff resources for the business. Staff will be recruit on a project basis and will be paid an hourly rate, regards to their position and level of expertise. Thus, it becomes a much clearer plan for the business to calculate the resource cost , where the profit is calculated as what is left with the fee income once the cost of resources, overheads and funding for the project are excluded.
Implementation Building Information Modelling (BIM)
Although our practice is still young and new, it is important for us to consider to make sure the secure project to be complete as accurate, productive and high quality as possible to build upon a good reputation in the industry. We should consider the implementation of Building Information Modelling (BIM) into the practice. With this, we are able to spend more time on thinking and designing of the project rather than overspending time one drafting. In order to undertake BIM as part of our business, it is advisable for us to identify a BIM manager to develop an estimate cost and time to implement and use BIM software before an integration plan to include schedules, targets, responsibility of team members and a future growth forecast can be developed. It is important for us to have a trained and skill staff with BIM operation and structure. Although it may come off cost and time consuming but it will give a good return as it is an investment to the business in a long term.
BIM gives a lot of benefits in many aspects in comparison to a traditional methodology which gives the practice the opportunity to prototype, to model an entire building, its site, its fabric and material and system to monitor in advance. Once BIM is implemented in our practice, the senior staff will have more experience and input of the system in terms of overseeing the delivery process and thus will increase in hours of both the project manager and project architect. Thus, they can use to spend in developing and increase the quality of the work.
Advantages of BIM.
Increase the company’s reputation while being competitive with other companies that are under the same scale Shifting works hours from drafting to design. Architect will reduce their time spend on drafting and spend more time on developing design, this will enhance the quality of the design produced complete with detailing. Improve the productivity and design documentation across discipline throughout the project as all related consultant will work on the same updated plan as produced in BIM. -
Broaden the skills and knowledge of existing staffs
Disadvantages of BIM
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Requires skilled staff for BIM implementation in the practice.
Implementation of BIM requires resources training, thus it takes time for the staff to learn and master BIM.
Future Considerations
To ensure the first five years of successful business for Ministry of Design (MOD), careful attention and consideration should be given and several key strategies are identified and taken into considerations into planning a sustainable long term business and management. It is important not to lose focus on the business management and projects regardless of the scale and the client.
Quality of Deliverables The ability to maintain and upgrade our production and services which impose the value of consistency in our practice plays an important key to a successful practice. We may want to consider in achieving our practice towards a recognized quality management system standards such as the International Standards Organization (ISO) 9000 series. By having this target, it will help us to achieve greater consistency through a more organized system and define work frame that results in the overall increase of efficiency and reducing possible mistakes.
Review and Benchmarking As our practice develops and making its name in the market, it is certainly that our goals and target of the business and practice would go through changes and diversions as to adapt the constantly updating business environment. Thus, it is important for us to keep reviewing our development and progress to clearly revise on our targets and objectives, and also how to handle the changes made. Placing a benchmark as a tool to assess our practice’s performance in comparison with other practices and competition will definitely help to clearly define our direction. With the expected reach of totality implementation of BIM by year 2016 will absolutely cause us to experience a major change in our practice within this 5 crucial years.
Growth and Expansion MOD would grow and develop to be more important well noted within the design and build environment market. Experiencing wide range of projects clearly brings benefits to us and promotes a better growth to the practice. Therefore, we will be looking for strategies to expand our size and get more highly qualified and talented staff resources for the practice, in parallel with the diversity of projects that we hope to receive in the future.
Theme 2 RE : Duties and Resnposibilities
Thank you very much for you recent letter regarding Duties and Responsibilities. The addressed issue on the compliancy of my work with the codes has been discussed earlier with the client. We have been waiting for the client to clarify on few matters before a contract was drawn up. Now that the client is aware that for the past five months we, have not been working with a proper contract in place and fee income, thus a formal relationship has now been set up between the client and Ministry of Design LLP. It is clearly stated in the ARB Code of Conduct that an architect must not undertake any professional work with a written agreement with the client, thus a formal relationship must be set up before any work is undertaken. ARB Code of Conduct (ARB, 2010) 4.4 You are expected to ensure that before you undertake any professional work you have entered into a written agreement with the client which adequately covers: − the contracting parties; − the scope of the work: − the fee or method of calculating it; − who will be responsible for what; − any constraints or limitations on the responsibilities of the parties; − the provisions for suspension or termination of the agreement; − a statement that you have adequate and appropriate insurance cover as specified by the Board; − your complaints-handling procedure (see Standard 10), including details of any special arrangements for resolving disputes (e.g. arbitration).
RIBA Code of Conduct (RIBA, 2005) 2.3 Members should ensure that their terms of appointment, the scope of their work and the essential project requirements are clear and recorded in writing. They should explain to their clients the implications of any conditions of engagement and how their fees are to be calculated and charged. Members should maintain appropriate records throughout their engagement.
You can find attached with this letter a copy of the agreement between our practice and the client for your perusal and documentation. I thank you for bringing up the concerns of appointment and I hope the attach documents respond to the questions that is been given in your letter. Please do not hesitate to contact me if there is further information or if you have any queries. Best Regards,
Ridhwan Dzulkafli Ministry of Design LLP
Terms of Appointment
Thank you for appointing Ministry of Design LLP to act as the architect on the Holloway Affordable Housing Project, we are looking forward to the opportunity and working with you on this project. Please find enclosed our Term of Appointment. We would be pleased if you could send a signed copy of the enclosed documents back to us. Looking forward to working and realised this new project with you.
Yours sincerely,
Ridhwan Dzulkafli For and behalf of Ministry of Design LLP
RIBA Chartered Architect Standard Conditions of Appointment for an Architect
Tel : Email: Address:
Resgistration Number: 1303894508
This form of appointment is based on the ‘RIBA Standard forms of Appointment 2010’ and is in compliance with the ‘ARB Code of Conduct 2010’.
Services Provided We shall carry out the tasks as per request which includes a full drawing package throughout the RIBA work stages 2013, obtaining Planning and Building Control approvals for the Holloway Affordable Housing Project. Ministry of Design (MOD) will act as your representative and advisor throughout the project on any issues affecting the cost, time or quality of the project. Architect’s Role and Level of Responsibility As your Architect for this project, it is our role and responsibility to provide a practice with reasonable skill, care and diligence in line with the normal standards of the Architect’s profession in performing the services and discharging all the obligations as agreed in the contract. These includes regularly update the client with the progress and performance of the work that may affect the brief, cost of constructions, timetable and the quality of work. The architect will keep the client informed if there is Other Persons to perform work or services in related to the project as well as knowing any information, decision or action required from the Client or Other Person related to the project. All matters will be decided and agreed upon with the Client’s consent. As a representative on behalf of the client, it is important that the client is aware that any contracts or other commitment cannot be entered by the Architect without Client’s consent. This includes on any termination of employment of Other Persons that the client has appointed. However in an event of an accidents or emergency regarding to material damage or human life the Architect may take action prior to consulting the Client. The architect will then take on the agreed actions at the soonest possible time.
Indicative Fee and Expenses Quote.
The Basic Fees for Ministry of Design practice services are structured as 12% of the project’s total construction cost which amounts to £XXXXXX excluding VAT. I suggest that the fee is to be delivered in accordance to the RIBA Work Stages and is explained as followed. The basic fees include the service of schematic designing and carrying out of construction works including numbers of site visits during the construction period. For additional or Other Services, the Services that are not covered within the Basic Fees that involves our expenditure made on your behalf, such as payments made to the local authority for the application of planning submissions or building regulations approval. The RIBA does not mention about fee proposal in conjunction with the new 2013 Plan of Works due to the new implications of BIM. However it is recommended to follow the existing Plan of Works (2007) as show below. Stage 0 Strategic Definition Hourly Rate* Stage 1 Preparation Hourly Rate * Stage 2 Concept Design 20% Stage 3 Developed Design 25% Stage 4 Technical Design 20% Stage 5 Specialist Design 20% Stage 6 Construction 10% Stage 7 Use and Aftercare 5%
Hourly rate for each person within the practice is show below. Associates - £110 Senior Architect - £85 BIM Consultant / Model Manager - £75 Architect - £65 Technician - £50
However, you will be informed if there are services that you requested falls under Other Services and we will not proceed with the services unless it is clearly authorized in the form of writing by the Client. Regarding on the payment to the Architect, once issued on the Architect’s account, it needs to be cleared within 14 days from the date of issue of the account. If the client fails to deliver the fee when it is due, the Client shall be entitled to simple interest at a specified rate until the date that the payment is received at the daily rate equivalent to 8% over the dealing rate of the Bank of England. A reasonable incurred penalty as for the act of mitigate of the Client in clearing payment of any sums due under this Agreement.
Liability and Insurance Our liability for loss or damage as the Architect shall not exceed the amount of professional indemnity insurance specified in the Project Data and will continue for a period of six years from the date the Contract is terminated. There will be no personal liability charged on the employee of the Architect, including any staffs of our company, or a member of a limited liability partnership or any of our agents for any negligence, default or any other liability issuing from the performance of the Services.
Suspension and termination. Either Architect or the Client may suspend the performance of any or all of the Services and/or other obligations by giving not less than 7 days of notice in writing specifying the services affected. The Architect shall be compensated for services performed prior to notice of suspension or termination. In the case of bankruptcy or death of either parties, the contract may be terminated with immediate effect but all outstanding fees for completed work will still have to be made on due.
Dispute Resolution. Disagreement or difference arising under the Agreement can be settled by discussion and negotiation between the two parties. If suitable or either party may as well refer the matter to adjudication arbitration or legal proceedings as specified in the Project Data.
Signing the Contract. If you agree with the contents of this letter, please sign both copies and initial, where indicated, both copies of the services schedule and return one copy of the documents to us and we shall be able to proceed to the next step and start the work.
Yours Sincerely,
Ridhwan Dzulkafl Minisitry of Design LLP
We confirm that we have read and understood the terms set out in this letter and attachments and that Ministry of Design LLP as the Architect of this project are to proceed with the services as described. Signed: Initials: Date:
Signed: Initials: Date:
Theme 03
Re. Context
Thank you for previous letter regarding Context. In the letter you have mention on the Building Information Modelling (BIM) becoming a high profile subject. This letter will explain on the possible cultural, financial, and legal changes that may happen due to the result of implementing BIM methodologies in our practice as well as suggesting on ways in which BIM may brought into the practice on a very restricted budget.
Cultural Changes.
When adopting BIM into the practice, there will be cultural changes into the working environment. The traditional way of working will immediately shifts towards a more collaborative way of working. The implementation of BIM will give a positive outlook and working together collaboratively which results in better communication and documentation throughout projects. The benefits of collaborative working environment will increase the amount of information required at the early stage of work, thus it allows other consultants to take more responsibility over the BIM model data while the Architect will take charge and lead the designing process to act as the ‘team leader’ and secure our position within the industry. There are also time implications in implementing BIM to the practice and it needs to be understood that it takes time to implement because of the training and learning processes of the system and the software. These time implications will affect the financial implication of implementing BIM and the disruption costs to the practice.
Financial Changes.
Some downside to this change in financial aspect is the fact that the training cost for BIM is relatively high. Based on 3Dreid, the overhead cost of BIM per person is around ÂŁ1000 which includes new computers, software and training. High amount of money will need to be invested in allow BIM to be fully integrated into the practice. This may cause the practice to loss at the beginning of the implementation of the system, but once BIM is set up there will be greater benefits in many aspects and to both the practice and clients and the initial investment should be counterbalance by a larger return on investment. As the workload of Architects builds up at the earlier stages of the project, there shall be the increase in fees that occurs parallel with the increased requirement for information input as required by the BIM model. Hence, creates the commercial advantage of keeping the experienced staff members due to the increased reputation of the practice and relative cost effectiveness of each project. A consideration of Ministry of Design LLP is to hire people who already have experience and training in BIM, this would reduce the costs of implementing BIM into the firm.
Legal Changes This new implementation of BIM into the practice requires new legal documentation and contract which act as the framework to support a new method of practice. Since the system is a collaborative and integrated, a higher possibility of miscommunication may appear because it is difficult to trace on the changes made on the working model. Legal changes onto firm’s business plan especially in terms of liability and insurance is important in a contractually manner to manage and avoid from any unwanted risk such as default and negligence. The practice should carefully decide and draw out a suitable liability with other consultants that are using and sharing the BIM model data and system as there are collaborative works in handling BIM based projects. The responsibilities and duties as well as obligations should be agreed by all parties before work is undertaken.
Implementing in Restricted Budget.
The cost of training the employees will be one of the biggest expenditures for a practice. Thus, the key towards managing the adoption of BIM under a restricted budget is to develop a proper planning to carry out the scheme. By phasing the implementation in order to be realistic about the target in relevance to time and scale would be an efficient way to implement the new system. The practice can start to implement a two dimensional BIM system using the current used software and hardware for example xrefs and layers should be used in CAD drawing to ensure that the structure are line up between components. Training is essential to ensure the implementation of BIM into the practice is successful. However, we can expand the skills and knowledge of employees on BIM through series of training, instead of dumping all the knowledge through one long and expensive session. Small practices will have less of a change compare to a larger practice when starting to implement BIM. Small practices will also have the advantage and opportunity to expand in response to BIM and put themselves ahead of the competition.
Future Problems as Small Scale Practice with BIM. It is important to understand that every project whether BIM is used fully, partially, or abortively, should be a learning process and allowing a strategy to be eventually achieved. We also should be aware and prepared on the potential problems that we may encounter in the future regarding BIM implementation.
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Software issues – transferring of data and information from different software platforms and formats are not compatible or sometimes is not possible. Office structural - It may be hard for the employee to adapt to the changes made from the traditional internal working structure. Collaborative working – If an incorrect model is used for manufacture, a serious error could occur and the liability in high circumstances be applied to all parties that involved. Working in collaboration and as a team does raise the issue of copyright. Thus, consideration by each party involved needs to be given to this issue at the beginning of the project as part of the planning process. A lawyer should be included as part of the team as to become an entity that ensure fair play and interpret situations to the benefit of the team. Pain and gain – Identifying the pain or gain share relies heavily on more open forms of projects accounting. As well as creating and managing a risk registers. Each party acknowledge the basic labour and material cost of performing the task as a target.
Implementing BIM Level 3 One of Ministry of Design LLP initial objective is to implement BIM Level 3 when it has become a more established level within the construction industry. By definition BIM level 3 means a fully interoperable immersive BIM environment where all individual BIMs are part of complete project mode regardless of the software used and location. In order to implement BIM Level 3 a greater integration is needed. At this moment, BIM exclusively held on Level 2 with ‘closed’ systems that only operate if we own the entire suite of products from a specific manufacturer. Before implementing BIM Level 3 which is more advanced to the practice, the scope of BIM Level 2 should be mastered and be highly experienced also the need of high quality and sophisticated computers and software. This will be an expensive investment and could provide complication but it brings huge benefits in the long run. One of major feature in implementing BIM Level 3 is that it enables different designers to import other designer’s 3D BIM files into their own analysis software. However, this is not something that is easily done, thus it is important for the members to acquire the master the skill of the system. The connectivity and collaboration of different parties involved is very important to the success of BIM Level 3 and by using the ‘Cloud’ (wireless network operator) as a medium to share BIM information and allow remote access to the model will add ease in adopting the BIM Level 3. However, since the data depends on the internet, it may cause problems as the Internet in the UK is not as sophisticated as it could be. Other than that, there is also problems in terms of security of the data being shared and how well protected it is. The method of the design processes is also vital in implementing BIM Level 3. The method of the design processes will need to be refined so clear methods are described at the beginning of each project. Each member that involved in the project will need to be clear on these methods as a step for the project to run smoothly and service and responsibility documents will need to be produce at the beginning of the project. These documents will also help the legal implications throughout the project by stating their responsibilities on their role and task.
Legal aspects will need to be taken into account and integrated Project Insurance will be required for the implementation for BIM Level 3 developed and implemented into practices and other parties involved before level 3 BIM is adopted. Ministry of Design LLP will need to take caution when adopting BIM Level 3 and respond to the current market. The practice can start to learn and understand what BIM Level 3 require and be prepared to implement BIM Level 3 to the practice. However, it would thoughtful to wait until the UK are ready to adopt so as not to waste money and time which is vital for an establishing practice.