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Atlas Comment: Alarm bells ring as Chinese win work in the UK

Friday 3rd June 2011

In a dramatic turn of the tide, the Shanghai based firm Neri & Hu have won London’s prestigious Bow Street Magistrates Court redevelopment.

Shock waves have been sent through the UK architectural industry, as Neri & Hu were able to undercut all the competition to bag Bow Street project. BDonline noted in their recent article “Jiricna claimed Lifschutz’s was the highest-scoring entry but said it was never appointed because Neri & Hu came in with a cheaper bid”.

So what does this mean for practices in the UK? With more competition from Asia and Australasia now setting up shop and winning work in the UK, it’s clear that the industry will have to rethink its business model. For decades, UK practices have spread risk by chasing work in the East, but this recent defeat on home soil signifies the importance of reassessing delivery strategies to remain competitive in the local market.

One way of remaining competitive is to lower fee proposals, but with professionals in the AEC industry willing to submit proposals at 40% below cost, suicide bidding is a worrying, as well as unsustainable solution. In addition to fending off the Eastern invasion, architectural practices are being hit with ever slimming fees and marginalisation within Design and Build contracts. Practices will find it difficult to find the creative space to deliver quality designs when fees are tight and time is limited.

Some large practices are trying to reduce costs by using their offshore offices to deliver the construction documentation- a model the Chinese practices will use more and more to outbid firms in the UK. This can be a costly solution that often leads to satellite offices preferring their own local work rather than the less glamorous documentation being sent from HQ. 

There is another option. It may not work for all practices on all projects, but it is certainly working for many practices that have already realised that they must adapt to survive. Collaborating with a quality design delivery partner who can produce a set of deliverables at a fixed and competitive cost both improves the chances of success when bidding for projects as well as reduces financial risk during the later production stages.

The industry is changing, and unless practices find a more sustainable and cost effective business model, we will see many more Bow Streets being won by the Asian competition.

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