I once managed a strategic planning project for a corporate client with an architect and stepped into the project after the project had been awarded. It blew my mind how much fee they were charging. Something north of $500k. The deliverables were very conceptual and didn't require a lot of hours compared to the fee. My rough guess the gross margins were above 80% maybe even 90%.
Every time I met the architect, I couldn't help but think the principal who pitched the project was a brilliant salesman or this type of work could be extremely profitable. Is this an anomaly?
Yes these projects aren't scaleable, you have to chase down each potential client, but no construction headache and no liability.
For those of you who are principals or at least have visibility into margins, what types of projects make sense these days?
sameolddoctor
Mar 31, 21 10:43 pm
Masterplanning is different from Strategic Planning. For example a firm that I worked for had a strategic planning department, who would connect clients with hotel operators etc. That stuff pays well, sure. Regular ol' masterplanning makes more than architecture (cuz a small team can easily tackle large masterplans at design stage), but its nearly not 80% margins lol. The profit after factoring in all the overheads is max 25%
greenlander1
Apr 3, 21 12:54 pm
Yeh makes sense I think what I saw was an outlier lol
I once managed a strategic planning project for a corporate client with an architect and stepped into the project after the project had been awarded. It blew my mind how much fee they were charging. Something north of $500k. The deliverables were very conceptual and didn't require a lot of hours compared to the fee. My rough guess the gross margins were above 80% maybe even 90%.
Every time I met the architect, I couldn't help but think the principal who pitched the project was a brilliant salesman or this type of work could be extremely profitable. Is this an anomaly?
Yes these projects aren't scaleable, you have to chase down each potential client, but no construction headache and no liability.
For those of you who are principals or at least have visibility into margins, what types of projects make sense these days?
Masterplanning is different from Strategic Planning. For example a firm that I worked for had a strategic planning department, who would connect clients with hotel operators etc. That stuff pays well, sure. Regular ol' masterplanning makes more than architecture (cuz a small team can easily tackle large masterplans at design stage), but its nearly not 80% margins lol. The profit after factoring in all the overheads is max 25%
Yeh makes sense I think what I saw was an outlier lol