Archive for February, 2011

Valuing Architecture

First off: I’ve re-jigged this site a little so you might need to update your RSS feeds and such. Sorry about that, but now everything should work much more smoothly.

Lately I’ve been thinking a lot about the practice of architecture and trying to make sense of it in relation to the other professions which together might be called the “built environment practices” including the usual engineers, contractors and consultants of various kinds as well as developers, bankers, politicians, and others who have a more distant—but no less important—impact on the built environment.

Inspired by my previous experience steeping in the startup culture of Silicon valley, I’m trying to dig into the difficulties of running an office, especially small offices, and how these difficulties might be thought of as symptoms of a misformulated profession. Or more simply: how can we hack architectural practice to make it more effective?

This is part of the puzzle:

The difference between these graphs can be read either of two ways. On the one hand it’s depressing. The size of the design fee for a significant project, relative to the income of a small office, is often substantial. This puts the office at risk should the project be stalled or canceled, and therefore increases the likelihood said office over-extends itself to satisfy their big client.

When an office’s portfolio is dominated by one client the dynamics of satisfaction begin to change. Because of the importance of the dominant client, their needs begin to eclipse the needs of others, including the development of new clients. Losing the client can mean losing the office, so what else can be done?

The diversity of an office’s portfolio is useful as a hedge against the risk of losing any particular client, but it’s also a useful way to maintain a healthy understanding of the minimum viable product (MVP) which then, in a self-reinforcing feedback loop flowing the opposite direction, increases the office’s availability for self-initiated research and business development.

MVP is a kind of strategic laziness: it’s a reminder to be focused and only develop those threads or ideas that are relevant at the moment. If laziness is choosing not to work, MVP is about choosing when and where to work.

On the other hand, the size of the design fee relative to the overall project makes half of an excellent argument about the leverage of design and its role as a multiplier that can, in the best cases, deliver value beyond its cost. This would be a reformulation from design as spending to design as an investment. Unfortunately the missing half is hard to come by: evidence of the returns. The shining example of Bilbao is often trotted out, and someone somewhere has done real calculations on how much income has been generated by the rebirth of the town (€168 million euros in 2001 alone, according to Forbes).

But this argument is not very useful when made on a case by case basis. It’s especially useless for young offices that have none of the reputation or cache that Gehry does. The more perceived value accumulates on behalf of starchitects, the more it is drained from the profession at large.

My question is how the practice might begin to develop and keep track of small indicators. How much does a renovation increase the resale value of a home, for instance? And by what percentage does a good renovation increase it over a less good renovation? How do we define “good” in a way that non-architects can understand?

How do we measure value in financial and social terms? There’s triple bottom line accounting, which works within the confines of a firm’s balance sheet, but how do we think about the perception of value from the outside? How do we find better ways to see and understand the value of architecture and spending in the built environment in general?

If I had interns they would be reading about contingent valuation and searching for ways to instrumentalize this branch of economics within the context of the built environment. But since I don’t have any interns, I will leave you with this excerpt from a paper subtitled “How to stop worrying and learn to love economics” (PDF link) which makes mention of the difficult task of valuing the Exxon Valdez oil spill. Can the impact ever be valued in an exact way? No, but it can be rigorous. And what’s instructive about this small vignette is the use of contingent valuation to assess the indirect perceptions of value which compliments more familiar ways to value the catastrophe directly.

The method has also been subjected to rigorous scrutiny, one of its biggest tests being its use to estimate the environmental damage caused by the supertanker Exxon Valdez, which ran aground in March 1989 off Alaska. This led to careful scrutiny in the profession, given the enormous interests and large sums of money involved. The United States National Oceanic and Atmospheric Administration (NOAA) hired two Nobel prize-winning economic theorists – Kenneth Arrow and Robert Solow – to chair a panel to assess the methods. The report (Arrow et al 1993) concludes “that contingent valuation (CV) studies can produce estimates reliable enough to be the starting point of a judicial process of damage assessment, including lost passive-use values”. This last term refers precisely to the non- use values of the environment consisting of existence, option, and bequest benefits – the very same benefits which we have just been discussing in connection with the valuation of art.

This post is an expanded excerpt from a lecture presented at Aalto University Department of Architecture on February 24th, 2011.

Music (without words) for writing to?

On a writing deadline and completely worn out on my current concentration playlist, I sent a tweet in desperation asking for new music recs.

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What followed was an @valanche of #musicforwriting from pals such as Judith, Michael, Meg, Jason Jason, and Matt. Michael Sippey had the good idea to do something charitable and post the collected results as if it were the olden times. One generally does what Sippey asks, so here are the results which contain many gems:

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Update! Katie, who is undoubtedly your new favorite because it says so right there in the URL, chimes in too:

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