Yes, of course they do. . .

Do offices ever take on more projects than they can handle based on the amount of staffing and knowledge to do the job?

Do wild bears ever shit in the woods?

rob, i assume people have to work overtime?

I've never been in an office where people didn't work over time - some places discouraged too much of it, but I don't see the problem in it.  You learn to be more efficient in your work flow and hope that makes up for extra work.  With fees where they are these days, I'm not sure you can make a good salary if you're in a 35hr/wk billable office.

Now would be a good time to bring back the art vs. architecture discussion.

If you take on too much - beyond that necessary to fill in for the inevitable hiccups in work flow from aborted projects to delays at one level or another - quality will suffer. If quality is the foundation of your practice, any compromise in that area can be a lethal blow. On the other hand if all you want to do is crank out the jobs and make money, then you can easily staff up and down as necessary to handle the load. Obviously these are extreme positions, but if the latter is your philosophy you're probably better off in another profession, and not just because there's already way too much shitty work in the world.

No the owner never wants people to do that.

then i suppose the owner will want to stop paying for overtime.

if you have a project that takes 9 hours to complete and 8 hours to do it, either the 9 or 8 is going to change....

also, people who own architect companies are often not capable of running businesses.  it's just a different skill set.

When I was just starting out an AE firm in town put the word out that they were offering unlimited overtime – time and a half then double. Everybody was quitting and flocking there including me. We were like a pack of feeding Hyena’s…guys worked so many hours to hold on to their double time that they slept under their desks and one older guy collapsed to the floor one afternoon and 3 guys carried/snuck him out the backdoor to take him to the hospital then snuck back in. I was there 2 years and the overtime was still going.

I think it’s a matter of deciding on the factors. Is the work a trend for expansion…is it a plum that can add to your future opportunities, like a building type you are searching for….do you have enough desks…will staff welcome any overtime etc. I never turned anything away…with the recessions my management policy was: “Make Hay While The Sun Shines”. I handled the overflow different ways: Got one big opportunity that was going to last over a year and I rented some raw space across the hall and staffed it with volunteers and new guys so as to not disrupt the office…other times I took the job and sub’ed it, or something else I had, out to firms that were not busy….I “rented” guys from other offices. I rarely if ever went overtime because as time passed fewer guys were interested in overtime.

I had a partner say once that an architect’s office is like a barbershop where you can only cut one head at a time – you can only cut so fast or you’ll cut somebody’s ear off.

It is a constant process of managing and setting expectations. The problem is not the workload it is not modifying expectations of the clients that goes along with it. Sometimes clients have to wait. Its very difficult to change expectations once they are set. A good office manager, and project manager team should set those expectations appropriately based on past experiences, staffing and workload. 

Architecture is not life and death. If you are having to work crazy overtime someone is screwing up their job. It is very easy to have clients developers and contractors push for tighter and tighter deadlines in this industry and too often spineless architects are willing to accept them thinking that's what they have to do to get the job. It takes an experienced hand to explain why and accurately project the timeline it will take to complete a design project. That sort of management, similar to business practices is not often something that accompanies good design knowledge and experience. Timeline and office workflow management are critical aspects of an architectural practice that I think too many firms, especially small ones, forgo or heap onto a smaller group of people expected to do everything these days. It's the whole do more with less attitude that took hold through the recession. Quality is what ends up giving, and you burn out employee's as OP seems to be experiencing. 

My office's work schedule is based on 35hrs/wk but my average week is 45 and every other one is close to 60 however, everything is paid. You make mistakes if you expect your staff to cram 12hrs of work into 7.

I work 45 per week and everything is ok. But I worked for a summer (2 years ago) in an office where they were a little bit disorganized, even we were working for overtime.

In 10 years of practice I have never worked more than 50 hours in a single work week. Work smart not hard.