Architecture & Design’s regular advice feature offering practical guidance on the important issues architects face during their working lives.
Q. What are the pitfalls of the consortium game?
A. A consortium is a group of companies who come together to bid on a project and are usually formed for major projects.
Consortiums can take the form of PPPs (Public Private Partnerships) and GMPs (Guaranteed Maximum Price) consortiums. English taxation laws have now seen PPPs replaced with PFIs (Privately Financed Initiatives) a new term for PPP where greater tax incentives are given to the proponents.
PPPs were developed in the UK in the 1990s in order for government to deliver public infrastructure such as hospitals, schools, roads, bridges etc and have been very successful. They deliver the best value and lessen the burden of debt on the government.
A PPP consortium team generally comprises the proponent (end operator), the financing team (the team of bankers or similar to raise the debt for the real estate bid), the design/construct manager and a team of consultants including architects, engineers of different disciplines etc.
There are two stages to consortium work: the bid stage and the implementation stage. I have found the bid stage is one of huge pressure. Time pressure, financial and reputational risk, trust issues and working with different value systems and personality styles. Adaptability is the answer. If you can keep your ego under control and focus on the outcome you can be a valuable member of the team and keep the bid on track.
Partnering with people who have worked together successfully before is a good starting point. This means that the roles and responsibilities of the individuals or entities of the team are clear, personality issues have often been ironed out and there is an agreement that all will make the bid stage work.
Once that is all in place and clearly understood, the important thing is to win the bid. A fundamental first step is to understand the brief. What are the clear objectives here and how are they going to be achieved. There is also an imperative to investigate the purpose of the project up front. For example, talk to the end-user groups about what the end product should be and how it should work, rather than blindly accepting the brief.
You need to get as much information as you can and from here you need to develop what supplements you can offer to your bid. You need supplements that will make your bid stand out from the other bidders. You need a strategic direction that clearly shows what your winning angle is. There needs to be a sustainable solution for the completed project.
The great risk with consortium work is finance. You are paid a nominal fee for your part and the true cost of your involvement is not recovered if your team is unsuccessful. This makes it very hard for small practices to gamble when the odds are unknown. I think it is a question of balance, work out what your business can absorb, and ensure that you keep the bread-and-butter work coming in. I have seen firms so caught up in the chase, and the adrenalin rush of being part of a major project, that they have failed to service current clients and keep their eye on the cash flow. It is a gamble. To take your eye off the ball in the excitement of bidding for major projects will put your firm at risk.
But the great thing about consortium work is that you get to contribute to major projects and be part of history. You get to work with talented people at the top of their field and you develop a reputation for working well as a specialist member of a team. I like the pressure, I like the intellectual stimulation and I limit the risk to my firm by making sure my current clients are serviced and ensuring fee producing work continues in the office during the bid periods.
Our expert: John Henry
John Henry is a director of Architeam Co-Operative. He is also a practicing architect and offers his opinion. Architeam Co-Operative is a recognized provider (with the Architects Registration Board of Victoria) of continuing professional development programmes. It runs a minimum of eight CPD sessions a year and is open to any practitioner (Architects or Building Designers) to attend at a minimum fee. This programme gives practitioners access to experts on a range of topics and allows discussion as a learning process.
