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School of Architecture, Carleton University, Ottawa, Canada
Design Economics Front Page

There is an unspoken crisis in the architectural profession. Architects are expected to lead project teams in an increasingly complex development process sometimes without first having studied and mastered the underlying municipal processes and, second, under a fee structure that is increasingly unrealistic. Margins in the profession are being squeezed at the same time as the expectations and needs of clients, municipal planners and politicians, approval agencies and community activists are soaring. Young professional architects feel that they are exploited by the system and that it is financially unrewarding to establish their own practice. The Design Economics course is aimed at giving students the skills they need to survive and thrive in a tough, competitive world; to obtain fair value for themselves and for their profession and to meet the needs of their clients and patrons.

The student will be expected to learn some of the fundamentals of the professional office practice including:

1. team co-ordination, management and leadership,
2. setting pricing schedules, marketing your practice, use of the web, negotiating a contract,
3. doing cost estimating, performing a cost/benefit analysis* and assessing development potential for a site,
(* Links of interest on the subject of cost/benefit analysis: Design Economics Handbook (Outline), Student Lofts (Student Project), Why Invest in Real Estate, Student Loan to a Prof, Sample IRR for a Residential Project, the Power of Leverage, Value of Education, the Value of a City's Treescapes.)
4. critical path methodology (i. Notes, ii. Example, iii. European Model, iv. North American Model, v. How Construction Project Really Get off the Ground: Flowchart) project scheduling, externalities, Benefits from Crashing the Schedule-- the Corel Centre Example,
5. concept planning, functional programming, highest and best use, consulting architecture and the due diligence process by Vince Colizza, more on due diligence, Architectural Competitions- a Fool's Game?
6. preparing concept and design drawings,
7. construction certification and payment certificates (Type A. holdback released during construction, Type B. holdback held until end of construction),
8. design documentation and construction contracts, Architectural Realization (in Power Point Format or HTML) by Ryan Koolwine: Stipulated Price Contracts (Full Tender), Cost Plus Contracts, Design/Build Contracts, Project Management Contracts, Development Proposal Contracts,
9. the four types of architecture: consulting architecture, project architecture, architect/developer (the architect as entrepreneur: developing for their own account) and contract architecture (the architect as partial entrepreneur: conceiving projects, controlling the site and finding a developer or owner/investor to back the project),
10. building code, fire code, health code (Re-engineering City Processes- Channeling the Building Permit Process and Allowing Architects and Engineers to Self Certify Certain Types of Building Permits)
11. expropriations,
12. financial management,
13. gross maximum price,
14. legal issues,
15. lien act (can an architect lien, Land Titles, Deeds, Transfers, Liens, Slander on Title, Privacy of Information)
16. office automation for architects,
17. project delivery process,
18. professional practice (start your own practice versus getting a job),
19. professional ethics (Canadian Architect Douglas Cardinal and the National Museum of American Indian, A Treatise by Idoia Arana-Beobide) (Trust, Building Your Brand, Protecting Your Reputation and the Irving Grundman Lesson)
20. intellectual property and the role of creativity in creating value (see, for example, Creative Arts and Entrepreneurship, Creating Value and the Example of McDonalds in France, Measuring the Value of a City's Treescape, UCSC Buries a Building)
21. bankruptcy laws,
22. risk assessment (title insurance),
23. tendering,
24. value engineering, cost/benefit analysis, time value of money (for example, a student loan to a professor) and rates of return (sample returns for the purchase of a single family home),
25. zoning,
26. official plan,
27. severance,
28. minor variance,
29. Ontario Municipal Board Hearings,
30. Divisional Court Appeals,
31. web site design, How to Build a Web Site, Nathan Jensen, Novmber 2006) and data backup and Personal Web Site (The Architect's Internet: A Look at the Value of Personal Websites for Architects by Mark Rosen, September 2004)
32. cyberspace marketing,
33. nano architecture and the 'seed',
34. brand extensions for the architect (for example, how one firm reinvented its practice),
35. on making presentations,
36. marketing your practice, guerrilla marketing, solution selling, changing the paradigm from an emphasis on costs to an emphasis on value creation (the example of Taylor-Irving, an Interior Design firm),
37. The use of statistics, probability theory and regression analysis in the practice of architecture; for example, calculating the probability of success to get a project off the ground and receive a contract for its architecture (the Corel Centre and Gino Rossetti, Detroit-based Architect), How to Calculate the Expected Value of Commissions, using market surveys to help determine functional programming; designing forms (using Perseus or other software) for web based surveys for Functional Programming requirements including surveys of user requirements. (For fun Online Surveys, use a free service like QuizYourFriends.com, using opinion surveys to sample local views about proposed projects; using regression analysis to determine how much permitted density as measured by FSI (Floor Space Index) or FAR (Floor Area Ratio) must be increased to, say, offset the cost of increased investment in public transit (e.g., the Corel Centre Lands, the Kanata West Concept Plan Area and the FSI increase required in, say, a 1,000 acre CO park to offset a $100,000,000 investment in new public transit (e.g., the Siemens/Dopplemayer Cableliner) based on a regression analysis relating land cost per s.f. to density (FSI), distance from the city centre, d and the size of a parcel). Poor use of statistics will be examined as well (e.g., correcting changes in the average price of homes over time for the average size of homes sold during that interval.)
38. Consulting Architecture (assisting clients with due diligence in purchase of property, highest and best use determination, selecting possible uses, preliminary sketch plans and yields, first order approximations of costs and benefits and returns).

A question upper most in the minds of architects these days is what is going to happen to the profession in the era of the web- demands on architects in the bizarre world of municipal approvals and in the land of nimby'itis (not-in-my-back-yard syndrome) are up and fee-for-services is down as mentioned above. Why pay an architect $6,000 to design a new home when 100s of designs and working drawings are available over the web for $350?

The web is blowing everything to bits, to paraphrase a recent book title. If as a profession, we don't 'get the web', we're toast. Architects must learn that their practices are subject to the same rules as other entrepreneurs- their compensation is tied to the value they create and their productivity. They need to market their services and extend the 'franchise' in order to escape the vise that the profession is currently in. Architects must learn the difference between a J.O.B. and entrepreneurialist culture- an entrepreneur tries to create lasting value that is independent of the founder or individual practitioner.

We will explore the relationship between creativity in design and the creation of value for the client to demonstrate this. The student will learn techniques to quantify the increase in value created by their designs and they will learn how to use feedback from such calculations to alter and adjust their concept designs. Students will be taught the rudiments of cost estimating so that they can perform take-offs from concept plans, which will allow them to provide the client with early indications of the status of the project in terms of budgetary constraints.

We will examine the hypothesis that the web could be a huge boon to architects. Architects will place their knowledge and portfolios on their personal web sites- all their Intellectual Property will be there and they must find ways to exploit their IP. The web may allow architects to sell their designs many times over- to use and reuse whole designs and parts of their work for many clients and customers. They can retain ownership and copyright of their IP and they may still be receiving royalties from their body of work even when they are relaxing on a beach.

One of the outputs from the course will be a personal web site constructed by each student. There the student will post their assignments. It is also recommended that they also post their resumés, their 'Bull Durham' bios, their existing portfolios and other aspects relevant to their future as architects and artisans.

Architects have to figure out how to do this in order to counter current trends in the profession. As an example of the possibilities, imagine coupling together Critical Path Scheduling software with a cost handbook calculator and your CAD system so that you can see what each design change costs and how it affects the project's schedule. Further, let's imagine connecting this new tool to a cost/benefit program so that you can see how the objective function (say, maximizing the Internal Rate of Return) behaves when you change the project's design or its schedule or when component or labour costs change or the benefit stream changes. Now that would be a powerful tool that would increase the value that architects can bring to the table. Architects should be able to justify their designs on the basis of the benefits they produce instead of an exclusive focus on costs and incessant budget cutting. Benefits can be measured in monetary terms but they can also be measured in other ways; for example, a costly design change in a museum project might be justified because it leads to a much higher visitor count even if attendance at the museum is free.

The student will learn the importance of being able to make effective oral presentations supporting their projects, sometimes to hostile special interest groups.

Case studies exploring the relationship between creativity in design and the creation of value for the client will be used to demonstrate this. These include examples drawn from the design of sub-divisions, affordable housing construction, commercial office and retail construction, outdoor amphitheater, theme parks and the Corel Centre. The student will learn techniques to quantify the increase in value created by their designs and they will learn how to use feedback from such calculations to alter and adjust their concept designs. Students will be taught the rudiments of cost estimating so that they can perform take-offs from concept plans which will allow them to provide the client with early indications of the status of the project in terms of budgetary constraints.

Students will also be provided with an understanding of the processes that exist today for project approvals. They will learn zoning and masterplanning systems as they exist in many parts of the world today. We will identify the key players and interest groups in the municipal approvals process including: the difference between land developers and home builders; developers, architects, planners, politicians, lobbyists, consultants, activists, environmentalists, engineers, consumers, bankers, penfunds, insurance companies, vencap, partners, attorneys, community associations, homeowner associations, municipalities, state and federal governments, approval authorities, boards, water and sewer, power, cable and phone utilities, entrenched interests- Enviros, Nimbyites, Bananas, Big Business and Media. We will also look at some of the proposals being put forward by neo urbanists who are pushing for reform of the process to permit broader scope for the mixing together of diverse land uses. To that end, we will study:

1. by-laws and land use planning controls,
2. de-regulation of zoning by-laws,
3. special interest groups, nimby behaviour, anti globalization- their impact on city and building design: see for example, Skyscapers,
4. the impact of the internet on built forms,
5. urban design issues and the changing face of architectural practice,
6. the impact of the web on architectural practice, harnessing the power of the web to improve returns in the practice of architecture,
7. future vision- where is the economy headed and how does it affect the future of architecture.

Web Enabled Courseware

We will be using a classroom with a data projector. Access to the web and all the relevant resources on the web will assist the class in its mission to better understand design economics and the accompanying assignments.

Students will be expected to be able to master rudimentary web development skills and post their assignments to their personal web sites. Personal web sites are an important tool for career development. Each student is encouraged to prepare their own site; to keep it updated throughout their careers, to keep their cv's current, to post their writings there and to generally use it to further their own personal goals and also to push the frontiers of knowledge and, ultimately, to leave behind, perhaps, something worthwhile for future generations. Students may choose to give their sites a name that conveys meaning to them and reflects their views and outlook. It is strongly suggested that you do not use your personal name for this purpose.

Assignments

The course is partly project based and essay based; there will also be a final exam based on material taught in the course. There will be a number of outputs from the course:

1. Students will be required to write one essay of four pages on a choice of topics including student-selected topics. The latter is subject to approval of the lecturer. Your essay must include a minimum of four references to existing literature so that the student has demonstrated some link to existing research and work done in the field. A minimum of two references must be from non-Internet based sources.

2. A project assignment will be completed by teams of students of not more than three students per team. The (DE) project will involve a functional program, a design element, cost and benefit estimating, critical path analysis using critical path methodology (CPM) and a financial analysis.

The students will learn to use Microsoft Project to prepare schedules and calculate the critical path. The design element will require that the student use Form Z, Autocad or some other CAD program. Your design and all other outputs will be exported in PDF format and posted to your student Personal Web Site for review. The DE project will involve written material and presentation material. Selected DE projects may be presented at the end of the course. Students may use their studio projects for this course or they can examine the construction of a granny flat; its design and its costs and benefits and its construction schedule.

Students will learn to use a spreadsheet program (Microsoft Excel- Kanata Co-op Example, Kanata Co-op Charts) to prepare a budget, a functional program and calculate the costs and benefits (including the Internal Rate of Return, IRR). Students will be expected to use the CMHC library (referring to R. S. Means or other current cost coefficient handbooks) or other suitable sources to do a detailed quantity survey of the project.

They may design a slab-on-grade type of building suitable for a Northern California climate and their choice of building materials must also suit their chosen locale. They may choose a northern shelf city such as Ottawa in which case the design will require a full foundation. Other design choices are available to the student teams.

Student teams will be encouraged to learn how to use and post forms (using Perseus or similar tools) on their web sites so that they may collect information, do housing surveys, get visitors to their sites to interact by expressing preferences or taking part in polls, assemble and understand statistics as a precursor and input into design and the design program. (Students may be asked to present their essay results as well.)

3. Each student will be required to prepare and submit by email two written questions on Design Economics for possible inclusion in course lectures. Sample questions can be found at: Year 2002- A to K. See also: Student Questions and Lecturer Answers for 2004.

4. There will be a final exam for this course.

Note: every effort will be made to return assignments but we can not guarantee that your assignments will be returned to you.

Lecture Schedule (Subject to revision)

Lecture 1- Introduction to Design Economics
Lecture 2- Concept Planning, functional programming, the relationship between costs and benefits, feedback loop between design program and cost/benefit analysis, Gross Maximum Pricing, design/build process, bringing GC and CM onto your side of the table, tendering sub-trades. Creativity, lateral thinking and value creation. Creativity and creation of value- Dunrobin Lake Commercial Block Upzoning. Value engineering.
Lecture 3 - The Granny Flat Assignment- detail discussion. Basic Web Design.
Lecture 4- Critical Path Methodology using Microsoft Project software: Completing Projects on a Timely Basis; Crashing the Schedule; Doing Tasks in Parallel; Detail Discussion of CPM.
Lectures 5- Putting your functional program in a spreadsheet. Overview of the use of CAD (Form Z or Autocad).
Lecture 6- Quantity Surveying, Cost Analysis, Cost Estimating, Cost/Benefit Analysis, Measuring Rates of Return; Internal Rates of Return (IRR); using Microsoft Excel spreadsheets for budgeting and Rate of Return calculations. Followed by Student Led Part of Class. Question and Answer Session on Design Economics.
Lecture 7- Running an Architecture Practice in the 21st Century: how to market your practice, resources needed to run it, client lessons (what do you do when clients don't pay, dealing with over-demanding clients, and the like), overcoming hurdles, relations with municipal and other regulatory bodies, how to survive down cycles, how to get started, greatest accomplishments as an architect, things one could do better if one could do them again, why architects are important even in the age of the web, the art of pricing, marketing your practice, financial management, why profit allows you to do great things in your practice, bankruptcy laws. The Project Delivery System. Project Organization. Project Management. Cost Control. Knowing the municipal process. Why contractors 'always' win using liens as leverage; holdbacks and construction certification. Team co-ordination and management. The players in this industry. Schematic Design. Design Development. Construction Drawings. Post Occupancy Evaluation.
Lecture 8- Guest Lecturer.
Lecture 9- Zoning laws, official plans, severences, minor variance, building permit applications, staged permitting. Ontario Municipal Board Hearings. Divisional Court appeals process. Following building code, health code and fire code. De-regulation of zoning by-laws. Dealing with special interest groups. Democratic abuse, nimbyitis, greed and fear. Density and Value- Why Nimbyites are Wrong. Neo-urbanist thinking and the changing nature of urban design. Avoiding designing and building suburban dreck. Catalysts and 'faery' dust architects can use to improve neighborhoods. Broken Windows Syndrome Ethics in architecture- the difference between a developer/architect and an architecture practice. Legal issues- the truth and the smart truth. Evidentiary hearings- appearing before community groups, municipal forums, regulatory hearings. Lobbying and negotiating tactics and strategy for project approvals. Expropriations. Risk assessment.
Lecture 10 - Environmentalism versus development. Farmland issue. Developer Charges and Municipal fees- taxation and affordable housing: being able to "run the numbers." Land assembly, Land Values/land conversion from rural to urban uses. Property rights and lost rights. Sub-division design and analysis, land required before purchase. Site selection. Conservation sub-division design. Mixed use.
Lecture 11- Professional practice. Intellectual Property. Using the web to enhance the practice of architecture. The impact of the web on built form/metaverse Impact on Built Form of Cities.
Lecture 12- Future Vision. Becoming more entrepreneurial. The difference between a J.O.B. and creating lasting value. Burbclaves Will Lead to Social Disorder and Collapse (the case against Gated Communities). Black Holes in Our Cities.
Lecture 13- In class review and preparation for final exam.

Need a personal web site? Every student should have a personal web site; one where you can upload all your IP (Intellectual Property) over your career so that one day you can make money from it while lying on a beach. Check out low cost dot ca availability at domainsatcost.

Accessibility

Students with disabilities requiring academic accommodations in this course are encouraged to contact a coordinator at the Paul Menton Centre for Students with Disabilities to complete the necessary letter of accommodation. After registering with the PMC, make an appointment to meet and discuss your needs at least two weeks prior to the first in-class test. This is necessary in order to ensure sufficient time to make the necessary arrangements. Please note the following deadlines for submitting completed forms to the Paul Menton Centre: November 5th for fall and fall/winter courses, and March 1st for winter term courses.

Grading

Grades will be based, in part, on course participation; students must demonstrate that they can contribute to fixing the profession; they must be creative in their efforts to analyze and correct problems. The class is designed to be interactive. Performance when presenting assignments will be important as well. You must be able to think on your feet. Much of the success of the architectural practice derives from the ability to clearly convey ideas and the merits of a project or design to a Board of directors, loans officers, community groups, local governments, planning officials, approval authorities and the media.

Course participation and attendance- 5%, Student Questions- 5%, Essay (Selected Essay Topics)- 15%, Design Economics Assignment (Granny Flat Quantity Survey and Design) and CPM (Critical Path Methodology)- 35%, Final Exam- 40%

Note: you MUST pass the final exam in order to pass this course.

For the grade in the "A" range, the instructor will have judged the student to have satisfied the stated objectives of the course in an outstanding to excellent manner; for the "B" range, in an above average manner; for the "C" range, in an average manner with C- being the lowest acceptable grade in the Program's Core courses; for the "D" range, in the lowest acceptable manner in non-Core courses, and for "F", not to have satisfied the stated objectives of the course. Grades will be assigned as A+ (90-100%), A (85-89%), A- (80-84%), B+ (77-79%), B (73-76%), B- (70-72%), C+ (67-69%), C (63-66%), C- (60-62%), D+ (57-59%), D (53-56%), D- (50-52%), F (0-49%) and ABS. (Please refer to the Calendar for regulations concerning grades, appeals and other program requirement information.)

Each grade will be based upon a comparison (1) with other students in the course and/or (2) with students who have previously taken the course and/or (3) with the instructor's expectations relative to the stated objectives of the course, based on his/her experience and expertise.

(Please note that Carleton University has a policy on plagiarism, which deals with the use of another's work without acknowledgement. The Administration has asked all lecturers to note this to their students and to mention that internet plagiarism is as detectable as other forms. )

Attendance

Attendance is required for all classes. The Lecturer will be available for office consultations for one hour after class.

About the Lecturer

Short Form Resumé of Dr. Bruce Murray Firestone, B. Eng. (Civil), M.Eng.-Sci., PhD.

Guest Lecturers

Guest lecturers who bring day-to-day experience in the industry or in government may be invited to the classroom depending on availability.

RETENTION OF WORK (from University Undergraduate Calendar)

Keeping a good portfolio is a most important part of architectural education. A portfolio represents a record of the student's progress and design experience over the years. It is an indispensable requirement for any job application in the future. A portfolio is started in first year and continues to expand until graduation. The School, therefore, requires that each student produce reductions (normally 8 ½ x 11 inch reproductions, colour or black and white, slides, and/or digital format CD) of their work at the end of each term. One copy of the work should be put in the student's portfolio and the other turned in to the instructor for retention in the School's archives. (This facilitates retrospective exhibitions of work, accreditation, publications and any future references for pedagogic purposes.) Original work is the property of the students, but the School retains the right to keep work of merit for up to two years after the date of submission. The School will make every effort to preserve the work in good condition, and will give authorship credit and take care of its proper use.

Readings

An Introduction to Management Science- Quantitative Approaches to Decision Making, David R. Anderson, Dennis J. Sweeney, Thomas A. Williams, South-Western College Publishing, New York, 2000.
Canadian Handbook of Practice for Architects
Ontario Architects Act
Project Delivery System, Public Works Canada

About the Web

Blown to Bits, Philip Evans and Thomas S. Wurster, Harvard Business School Press, Boston, 2000.
Crossing The Chasm: Marketing and Selling High-Tech Products to Mainstream Customers, Geoffrey A. Moore, Harper, 1999.
Inside the Tornado: Marketing Strategies from Silicon Valley's Cutting Edge, HarperCollins, 1999.
Using Microsoft Project Software.
Using Corel Web Designer Software.

Suggested Readings (Excerpts May Be Available from the Lecturer)

A Better Place to Live- Reshaping the American Suburb, Philip Langdon, University of Massachusetts Press, Amherst, 1994.

Affordable Homes Program- Teaching, Research, Knowledge transfer, McGill University, Montreal, 1996.

Boom, Bust & Echo 2000, Profiting from the Demographic Shift in the New Millennium, David K. Foot with Daniel Stoffman, Macfarlane, Walter & Ross, Toronto, 1996 & 1998.

Cities and the Wealth of Nations- Principles of Economic Life, Jane Jacobs, Random House, New York, 1985.

Conservation Design for Subdivisions- A Practical Guide to Creating Open Space Networks, Randall G. Arendt, Natural Lands Trust, American Planning Association and American Society of Landscape Architects, Island Press, Washington, D.C., 1996.

Fixing Broken Windows- Restoring Order and Reducing Crime in Our Communities, George L. Kelling and Catherine M. Coles, Simon and Schuster, New York, 1996.

Geography of Nowhere- the Rise and Decline of America's Man-Made Landscape, James Howard, Kunstler, Touchstone, New York, 1993.

Getting to Yes- Negotiating Agreement Without Giving In, Roger Fisher and William Ury, Penguin Books, New York, 1991.

Home from Nowhere- Remaking Our Everyday World for the 21st Century, James Howard Kunstler, Simon and Schuster, New York, 1996.

Lost Rights- the Destruction of American Liberty, James Bovard, St. Martin's Press, New York, 1994.

Small is Stupid- Blowing the Whistle on the Greens, Wifred Beckerman, Redwood Books Limited, Trowbridge, 1995.

Snow Crash, Neal Stephenson, Bantam Books, New York, 1992.

The Building Code- containing the Building Code Act and O. Reg. 419/86, Government of Ontario, Ministry of Housing Buildings Branch, Queen's Printer, Toronto, 1986.

The Death and Life of Great American Cities, Jane Jacobs, Vintage Books, Random House, New York, 1961.

The Diamond Age- or, A Young Lady's Illustrated Primer, Neal Stephenson, Bantam Books, New York, 1995.

The Ingenuity Gap: How can we solve the problems of the future?, Thomas Homer-Dixon, Alfred A. Knopf, New York, 2000.

The Origin and Evolution of New Businesses, Amar V. Bhide, Oxford University Press, 1999.

What They Don't Teach You at the Harvard Business School, Mark H. McCormack, Bantam Books, New York, 1984.

What They Don't Still Teach You at the Harvard Business School, Mark H. McCormack, Bantam Books, New York, 1989.

Why Things Bite Back- Technology and the Revenge of Unintended Consequences, Edward Tenner, Alfred A. Knopf, New York, 1996.

Copyright. Dr. Bruce M. Firestone, Ottawa, Canada. 2002.


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Dramatis Personae

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