RIBA Business Benchmarking 2015

RIBA Business Benchmarking 2015 Report prepared for the RIBA by The Fees Bureau RIBA Business Benchmarking - 2015 Report Page 1

RIBA Business Benchmarking 2015 Welcome to the new look RIBA Benchmarking Survey. Now produced by The Fees Bureau, this report together with our new online Benchmarker is designed to give Chartered Practices the tools you need to benchmark your practice. Following the approach used in the other research reports produced by The Fees Bureau, we ve attempted to analyse the data in such a way that it is of immediate and practical use to Chartered Practices. You ll find more data tables and a different visual display of the information compared with the previous reports. The report remains our analysis of the research but start using the new online Benchmarker and you will be in control of how you examine the research findings. There are literally hundreds of different permutations you can specify, to examine the data in a way which is even more relevant to your own practice s circumstances. We hope you will find the results of this analysis stimulating and informative. For us personally, analysing and writing the RIBA Benchmarking Survey is a high point in the 25 years we have spent researching business information for architects. Please let us have your comments so we can continue to improve the survey next year. Aziz Mirza Vince Nacey Directors, The Fees Bureau Data analysis and reporting undertaken by The Fees Bureau, a division of Mirza & Nacey Research Ltd Data collection by MRM Solutions Ltd Research undertaken for the Royal Institute of British Architects 66 Portland Place London W1B 1AD www.architecture.com December 2015 Copyright Royal Institute of British Architects 2015 This report is designed to be read in association with the Benchmarking website, available to Chartered Practices at www.ribabenchmark.co.uk The information in this publication is based on a survey of Chartered Practices undertaken in 2015. Whilst every effort has been made to ensure the accuracy of information in this publication, each of the RIBA, The Fees Bureau/Mirza & Nacey Research Limited and MRM Solutions Limited accepts no responsibility for any omissions, errors of fact or opinions expressed. The information supplied may be used as an aid to decision making but it is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the information. RIBA Business Benchmarking - 2015 Report Page 2

Contents page: 0: Survey Background 0.1 Executive summary 2 0.2 Key statistics and Business Benchmarks 3 0.3 Survey method and respondent profile 4 0.4 Definitions 5 1: Size & Type of Practice 1.1 Staff employed in architectural practices 6 1.2 Staff numbers 7 1.3 Permanent staff 8 1.4 Freelance / contract staff 9 1.5 staff numbers by region 10 1.6 staff numbers by gender 11 1.7 Legal status of practice 12 1.8 Number of offices 13 2: Practice Revenue 2.1 Total revenue - all Chartered Practices 14 2.2 Revenue by practice size 15 2.3 Practice revenue per head 16 2.4 Revenue by region 17 2.5 Revenue by type of work 18 2.5 Revenue by sector 19 2.5 Revenue by client 21 2.5 Revenue by type of service 22 3: Practice Profits 3.1 Profits by size of practice 23 3.2 Profits per head 25 3.3 Dividends 26 3.4 Profits by region 27 4: Practice Expenditure 4.1 Expenditure by size of practice 28 4.2 Personnel 29 4.3 Premises 29 4.4 IT, marketing, legal, financial 30 4.5 Travel 30 4.6 Other expenditure 31 page: 5: Salaries 5.1 Salaries & Dividends: Partners, Directors & Sole Principals 34 5.2 Salaries: Salaried Partners & Directors 35 5.3 Salaries: Associates 36 5.4 Salaries: Architects 5 years + ARB 37 5.5 Salaries: Architects <5 years ARB 38 5.6 Salaries: Technologists 39 5.7 Salaries: Assistants Part 2 40 5.8 Salaries: Assistants Part 1 41 5.9 Salaries: other Chartered 42 5.10 Salaries: other fee earning 43 5.11 Salaries: office management, support and admin 44 5.12 Value of fringe benefits 45 6: Business Policies 6.1 Business Plans 46 6.2 Cashflow & Budgets 47 6.3 Time tracking 48 6.4 Job descriptions, employment policies 49 6.5 Equality, diversity & inclusion 50 7: Work Areas 7.1 Services 51 7.2 Number of Projects 53 7.3 Number of Clients 54 8: New Business 8.1 Bids and outcomes 55 8.2 Hourly rates 57 9: International 9.1 Offices outside the UK 59 9.2 Revenue from outside the UK 60 RIBA Business Benchmarking - 2015 Report Page 1

Background 0 0.1 Executive Summary It s a diverse profession. Certainly, Chartered Practices share many of the same features - practices are generally headed by the people who own them; most are limited liability companies; the type of service offered is broadly similar with little evidence of specialisation or diversifying beyond core design services. But at the same time, everything is different. Larger practices are focused more on new build work; smaller ones on refurbishment. Larger practices have more clients and jobs, but a smaller number of clients and jobs per head of staff than the small practices reflecting the fact that jobs undertaken by large practices are bigger. Small practices are very much focused on private housing, and in particular housing work for private individuals; large practices have a much wider spread of activity. The research findings demonstrate that it s not really possible to make general points about the profession. So in this new take on the RIBA Benchmarking exercise, we are focusing away from a single benchmark which may be applied to the whole profession, and instead encourage you to use the survey results to create your own benchmarks depending on what size or type of practice yours is. For example, the profit as a per cent of revenue figure varies significantly by practice size, as it usually includes some of the Partner or Director s pay. So smaller practices where Partners and Directors make up a larger proportion of the staff numbers need to generate higher percentage profits than larger practices. 32,000 staff employed in practices, includes 4,400 Partners, Directors, Sole Principals 2.4 bn total revenue 55% of practice revenue is from housing. Majority of this is from one-off housing & extensions 124,000 projects worked on by practices in the last 12 months 500 million revenue from work on projects outside the UK RIBA Business Benchmarking - 2015 Report Page 2

0.2 Key Statistics and Business Benchmarks Revenue Taken together, 2.4 billion worth of revenue was generated by RIBA Chartered Practices in the last 12 months. A small number of very large practices account for a disproportionate share of total revenues; while 55 per cent of this revenue came from London based practices. Revenue is the fundamental practice Benchmark. Although average revenue per practice varies hugely by practice size, revenue per head is a relatively more even figure, averaging 56,000 across all practice sizes. 50+ staff 10 to <20 staff 3 to <5 staff 51,600 Average practice revenue per head, all fee earning staff, selected practice sizes. See section 2, pages 14-23 91,600 66,300 50+ staff 10 to <20 staff 3 to <5 staff 12% 25% Profits Practices total profits add up to over 400m. This is 18 per cent of revenue. This proportion varies widely between practices of different sizes; it is considerably higher amongst small practices than for large ones. A key benchmark, but as it varies so much by size it s important to consider this benchmark at the correct level for your practice s size profile. 36% Salaries Practices spend 40 per cent of revenues on paying salaries. Average salaries increase with practice size, for all staff types. Use this benchmark as an aid to compare with the salaries you pay, not just against similar sized practices but against other practices with whom you compete when recruiting. Average earnings for selected staff, all practice sizes UK average. See section 5, pages 32-45 Average practice profits as a per cent of revenue, selected practice sizes. See section 3, pages 24-27 Partners, Directors, Sole Principals Associates Architects 5+ years ARB Architects <5 years ARB 32,000 38,000 43,500 42,000 71% 50+ staff 10 to <20 staff 3 to <5 staff 67% 41% Business Plans & Cashflow A majority of small practices plan up to 12 months ahead, a majority of larger practices plan for the next two, three or more years. Similarly, with cashflow: the larger the practice, the longer the time period over which the cashflow forecast is made. It s vital to plan ahead and these benchmarks will reveal how far ahead other, similarly sized, practices are looking. Practices whose Business Plans extend to 2 years or more, selected practice sizes. See section 6, pages 46-48 Success at winning work Practices report a success rate, on average, of 55 per cent. This varies by size; smaller practices have a higher success rate than larger ones. This is partly due to smaller practices being more likely to be appointed without being involved in a competitive process. Explore this benchmark further by looking at how bids were won. Proportion of bids won - last 12 months, selected practice sizes. See section 8, pages 55-56 50+ staff 10 to <20 staff 3 to <5 staff 59% 51% 37% RIBA Business Benchmarking - 2015 Report Page 3

0.3 Survey Method and Respondent Profile The RIBA Benchmarking Survey has been established for a number of years and it is mandatory for Chartered Practices to participate in the survey. Respondents completed an online survey questionnaire, data was then analysed and tabulations produced. The survey questionnaire was completely re-designed this year. Therefore, the information in this year s survey may not be precisely comparable with that from previous years. Our thanks go to all Chartered Practices for participating in this year s Benchmarking Survey. The response profile is detailed in Tables 0-1 and 0-2. Practices from London, and small practices (with fewer than 5 staff) account for a large proportion of total response, however, this is consistent with the membership profile of Chartered Practices. Chart 0-1 Survey response by size of practice 10 to <20 20 to <50 5 to <10 50 to <100 100+ Table 0-1 Number of respondents by region 1 3 to <5 2 Data is analysed by practice size and by region. Where there is insufficient response, the cell is marked as n/a. We continue the practice of previous RIBA Benchmarking surveys of only reporting cells where the cell size is 30 or more. This prevents any chance of an individual practice being identified. Consequently, some information (eg salaries for specific staff groups) for regions and size groups which have small numbers of practices, is limited or not available. Chart 0-2 Definition of the RIBA regions as used in this survey Scotland RIBA Region per cent South West 7 Wessex 3 South 6 South East 11 London 36 West Midlands 5 East Midlands 4 East 7 North West 7 Yorkshire 5 North East 2 Wales 2 Scotland 2 Northern Ireland 2 ALL 100 Northern Ireland North East Table 0-2 Number of respondents by practice size (number of staff) Practice size per cent North West West Midlands Wales South West Wessex South Yorkshire East Midlands East London South East 1 14 2 13 3 to <5 18 5 to <10 25 10 to <20 15 20 to <50 9 50 to <100 3 100+ 2 ALL 100 The two largest size groups are merged into one (50 plus) to give a larger and therefore more statistically valid group for the analysis RIBA Business Benchmarking - 2015 Report Page 4

0.4 Definitions Reporting Point All data as at 01 May 2015 unless stated otherwise. Financial data for the 12 months ending 01 May 2015, or the closest financial period for which responding practices had data available when they completed the questionnaire. Practice Size Size is based on the number of staff, Full-time Equivalent, and including both Permanent staff and Freelance / Temporary staff working in the practice on 01 May 2015. Staffing All staffing data is presented as Full-time Equivalent (FTE). Equity Partner : a Partner who owns a share of the practice. Shareholding Director : a Director who owns a share of the practice. Salaried Partner : a Partner who does not own a share of the practice. In this instance, the title Partner would usually be to denote seniority. Non-shareholder Director : someone with the title Director who does not own a share in the practice. The title usually denotes seniority. Associate Director or Associate : a senior member of staff, below Director level, who has been given this title. Architect (5 years or more ARB registered, or equivalent to ARB if from outside the UK) : an architect, who is fully qualified and registered with the ARB and has been fully qualified and registered for at least five years. The staff member may or may not be a Chartered Architect. Architect (under 5 years ARB registered, or equivalent to ARB if from outside the UK) : an architect, who is fully qualified and registered with the ARB and has been fully qualified and registered for less than five years. ARB equivalent if outside the UK. The staff member may or may not be a Chartered Architect. Technologist : Staff member who is likely to have received some formal architectural training, and is likely to be a member of the CIAT (Chartered Institute of Architectural Technologists). Architectural Assistant (Part 2 qualified) : staff member who has received formal architectural training to Part 2 level. This includes people who are working towards their Part 3 examinations. Architectural Assistant (Part 1 qualified) : staff member who has received formal architectural training to Part 1 level. This includes people who are working towards their Part 2 examinations. Other Chartered construction professionals : professional, Chartered members of organisations which are members of the Construction Industry Council, eg RICS, RTPI, CIBSE, ICE, CIOB - see full list at CIC website, www.cic.org.uk/about-us/cic-members. php Other fee earning staff : staff who offer services which are directly chargeable to clients, for example interior designers. Office management / other support and admin staff : staff who provide a management, specialist or support role for the practice, i.e. everyone who has not been identified above. Revenue, Profits, Expenditure Practices were asked to source revenue data from their audited or end of year accounts, as prepared by their accountant. If that is not available, or respondents felt this provided an inaccurate portrait of their practice, then practices were asked to source data from their management accounts. Respondents were asked to answer all questions using the same set of accounts to permit a consistent statistical base. Practice revenue : the turnover, or fee income, of the practice. The profits figure is stated before the deduction of tax. VAT is not included either in revenue or expenditure data. This remains the case for practices who are not VAT registered. Building Sectors New build : an entirely new structure. Refurbishment : work to an existing building. Conservation : work to buildings originally constructed pre 1919, or a Listed Building Types of Service Full Service : preparation & brief, concept, developed, and technical design, plus administration of the building contract for the construction phase. This corresponds to work stages 1 to 6 RIBA Plan of Work 2013. It may additionally include stages 0 (strategic definition) and 7 (in use). See www.ribaplanofwork.com Work Stages 1 to 3 in the RIBA Plan of Work 2013 : preparation & brief, concept and developed design including information required for Planning.See www.ribaplanofwork.com Work Stages 4 to 6 in the RIBA Plan of Work 2013 : preparation of technical design; administration of the Building Contract for the construction phase, to include regular site inspections and review of progress, to conclusion and handover to client. See www. ribaplanofwork.com Hourly charge-out rates The average charge-out rates that are used for calculating fees on projects. Outside the UK Outside the UK everywhere geographically outside the UK, although for the purposes of this survey we include the Isle of Man and the Channel Islands as the UK. RIBA Business Benchmarking - 2015 Report Page 5

1 Size & Type of Practice 1.1 Staff employed in Architectural Practices The architectural profession is dominated by many very small practices. Fourteen per cent of practices have just one staff member the practice owner; nearly as many have two. Nearly half (45 per cent) of all practices have fewer than five staff; 70 per cent have fewer than ten staff. At the other end of the size scale, just 5 per cent of practices employ 50 or more staff. Chart 1-1 ALL staff numbers and type other fee earning office management / support Partners, Directors, Sole Principals Overall, more than 32,000 staff (full-time equivalent) are employed in Chartered Practices. But the profile of the distribution of the number of staff is very different from the distribution of the number of practices. Almost exactly half of staff are employed in practices with more than 50 staff. So the 120 largest practices employ as many staff as all other 3,000+ practices put together (see chart 1-3). other Chartered Arch. Assistants Architects Associates The total number of staff employed is higher now than at any point in the past four surveys. The increase since the 2014 survey is 15 per cent: another 4,000 FTE staff are employed. Technologists Chart 1-2 Total number of staff employed in architectural practices: Trends 2012 to 2015 Table 1-1 Practice size - ALL number of staff number of staff employed in all practices 35000 30000 25000 20000 15000 10000 5000 per cent / number per cent of practices Total no. staff (FTE) employed in ALL practices 1 14 318 2 13 585 3 to <5 18 1,393 5 to <10 25 3,841 10 to <20 15 4,639 20 to <50 9 5,654 50 + 5 15,995 ALL 100 32,426 0 2012 2013 2014 2015 Source of back data: previous RIBA Business Benchmarking surveys, 2011/12 to 2013/14 RIBA Business Benchmarking - 2015 Report Page 6

1.2 Staff numbers Staff numbers include the practice owner (Partner, Director or Sole Principal) and also include any freelance or temporary staff working in the practice on 01 May 2015. The figures include 2,100 freelance or temporary staff. Fifteen per cent of all staff employed in practices are Equity Partners or Shareholding Directors, while another 3 per cent are Salaried Partners or Directors. So nearly one in five practice staff are owners or very senior. The ratio of Partners, Directors and Sole Principals declines with practice size, so clearly virtually all staff in 1 or 2 person practices are Partners, Directors or Sole Principals, but this falls to 20 per cent in size 10 to <20, and 9 per cent in practices with 50 or more staff. And in these largest practices, 40 per cent of Partners and Directors are Salaried Partners and Directors, a far higher proportion than overall (18 per cent). Nearly one third (32 per cent) of all staff are salaried Architects including Associates. Ten per cent of staff are Technologists, while 18 per cent are Architectural Assistants. There are twice as many Part 2 Assistants as Part 1, this is a consistent ratio for all practice sizes above 5 staff. Other professionals with a Chartered construction industry status account for 4 per cent of all staff, other fee-earning staff total 7 per cent of staff, while office administration and support staff account for 12 per cent of all practice staff. The proportion of support staff is remarkably constant for all practices with more than 2 staff; ranging between 11 and 13 per cent of staff for each practice size. Chart 1-3 Number of staff employed by practices 350 300 number of practices 250 200 150 100 50 0 5 10 15 20 25 30 35 40 45 50 55 practice size - number of staff 60 65 70 7580 85 90 95 100 Chart 1-4 Employment of staff analysed by practice size share of number of practices share of all practice staff 0 20 40 60 80 100 per cent share practice size: number of staff 1 2 3 to <5 5 to <10 10 to <20 20 to <50 50 + RIBA Business Benchmarking - 2015 Report Page 7

1.3 Staff numbers - Permanent Staff The vast majority of staff employed by architectural practices 94 per cent are employed on a permanent basis. That equates to 30,300 full-time equivalent staff. The average number of permanent staff by practice size is shown in Table 1-2 below. On average, an architectural practice has 13.6 FTE staff, including 2.0 Partners, Directors and Sole Principals, 1.7 Associates, 2.6 Architects, 1.2 Technologists and 2.4 Architectural Assistants. Chart 1-5 Ratio of Permanent to Temporary/Freelance Staff Temporary / Freelance Permanent Table 1-2 Average number of staff per practice - Permanent Staff number (FTE) practice size equity Partners, shareholder Directors, or Sole Principals 1.0 1.4 1.5 1.8 2.2 3.0 6.9 2.0 salaried Partners or non-shareholder Directors 0.0 0.0 0.1 0.1 0.4 0.9 4.4 0.4 Associate Directors or Associates 0.0 0.0 0.1 0.4 1.4 3.6 20.3 1.7 Architects (5 years + ARB registered) 0.0 0.0 0.2 0.6 1.3 3.1 14.0 1.4 Architects (<5 years ARB registered) 0.0 0.0 0.1 0.4 1.2 2.7 12.7 1.2 Technologists 0.0 0.0 0.2 0.6 1.5 3.0 9.6 1.2 Architectural Assistants (Part 2) 0.0 0.0 0.2 0.8 1.6 3.9 15.3 1.6 Architectural Assistants (Part 1) 0.0 0.0 0.2 0.5 1.1 2.0 6.0 0.8 other Chartered constr. professional 0.0 0.0 0.0 0.1 0.1 0.6 7.5 0.5 other fee earning staff 0.0 0.0 0.1 0.2 0.5 1.8 12.5 1.0 office management / support & admin 0.0 0.2 0.3 0.7 1.6 3.2 16.6 1.7 ALL 1.0 1.8 2.9 6.1 12.7 27.9 125.7 13.6 RIBA Business Benchmarking - 2015 Report Page 8

1.4 Staff numbers - Freelance / Contract Staff Six per cent of staff working in architectural practices are working on a freelance or temporary basis on the 01 May 2015. That equates to 2,100 full-time equivalent. The proportion of staff who are freelancers varies quite considerably by practice size; ranging from about 5 per cent in practices with more than 20 staff, to about 9 per cent in practices with 2 or 5 to <10 staff, while the peak employment of freelancers is recorded by practices of size 3 to <5 where 16 per cent of staff are freelance or temporary. Chart 1-6 Proportion of Temporary/Freelance staff by size of practice average per cent freelance staff 20 15 10 5 0 1 2 3-<5 5-<10 10-<20 20-<50 practice size: number of staff 50+ Table 1-3 Average number of staff per practice - Freelance and Contract Staff number (FTE) practice size Associate Directors or Associates 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.0 Architects (5 years + ARB registered) 0.0 0.0 0.1 0.1 0.2 0.2 0.8 0.1 Architects (<5 years ARB registered) 0.0 0.0 0.0 0.0 0.0 0.1 0.5 0.1 Technologists 0.0 0.0 0.1 0.1 0.2 0.3 1.7 0.2 Architectural Assistants (Part 2) 0.0 0.0 0.1 0.1 0.1 0.2 0.4 0.1 Architectural Assistants (Part 1) 0.0 0.0 0.1 0.1 0.0 0.1 0.2 0.0 other Chartered constr. professional 0.0 0.0 0.0 0.0 0.0 0.1 2.3 0.1 other fee earning staff 0.0 0.0 0.0 0.1 0.1 0.2 1.1 0.1 office management / support & admin 0.0 0.0 0.1 0.1 0.1 0.2 0.5 0.1 ALL 0.0 0.2 0.5 0.6 0.8 1.4 7.6 0.9 RIBA Business Benchmarking - 2015 Report Page 9

1.5 Staff numbers by region Looking at total staff numbers - permanent and freelance combined, for all Chartered Practices - shows that more than 15,000 staff work for London practices. This is 47 per cent of all staff employed in UK Chartered Practices. This puts London practices way ahead of any other region in terms of employment: the next closest are the South East and the North West, each employing about 2,500 staff. The average practice size in London is 19.1 staff, and 18.6 in the East Midlands, ahead of other regions. The smallest average practice sizes, of below 10 staff, are recorded in Wessex, the East of England, and Yorkshire. Chart 1-8 Average number of staff per practice, by region avearge number of staff per practice 17.0 and over 13.0 to 16.9 9.0 to 12.9 under 9.0 Chart 1-7 Share of total practice staff employment by region Northern Ireland Scotland Wales South West North East Wessex South Yorkshire North West South East East East Midlands West Midlands London Table 1-4 Average number of staff per practice analysed by region (permanent and freelance / contract staff combined) number (FTE) region South West South South East London equity Partners, shareholder Directors, or Sole Principals 1.9 1.7 2.0 1.8 2.1 2.0 1.9 1.8 2.0 2.3 2.0 2.0 2.5 2.2 salaried Partners or nonshareholder Directors 0.3 0.1 0.4 0.3 0.6 0.4 0.7 0.2 0.3 0.3 0.2 0.8 0.5 0.3 Associate Directors 1.2 0.6 1.2 1.4 2.4 1.1 2.0 0.8 2.0 1.7 1.6 1.8 2.4 0.7 Architects (5 years + ARB) 0.8 0.7 1.2 1.2 2.1 0.8 1.7 0.8 1.6 1.5 1.0 1.7 2.2 1.6 Architects (<5 years ARB) 0.5 0.5 0.7 0.7 2.3 0.9 1.0 0.4 1.0 0.7 0.7 0.7 1.3 0.6 Technologists 1.6 0.7 1.2 1.1 1.0 1.4 2.7 1.7 1.9 2.5 1.5 2.6 1.6 1.8 Architectural Assistants (Part 2) 0.8 0.6 1.1 0.9 3.1 1.2 1.4 0.6 1.0 1.0 0.7 0.7 2.0 1.0 Architectural Assistants (Part 1) 0.8 0.5 0.6 0.7 1.2 0.7 1.1 0.5 0.7 0.7 0.5 0.6 0.6 0.5 other Chartered constr. prof 0.4 0.0 2.4 0.3 0.7 0.2 1.3 0.2 0.7 0.5 0.2 0.2 0.3 0.3 other fee earning staff 0.7 0.1 1.8 0.7 1.3 0.5 2.4 0.4 1.5 0.7 0.2 1.3 1.1 0.2 office management / support 1.4 0.9 1.4 1.4 2.3 1.3 2.4 1.1 1.8 1.7 1.4 2.1 1.6 1.2 ALL 10.4 6.5 14.0 10.7 19.1 10.4 18.6 8.5 14.5 13.8 9.9 14.5 16.2 10.0 West Mids East Mids East North West North East Wales Wessex Yorkshire Scotland N. Ireland TOTAL No. STAFF EMPLOYED 1,654 488 1,898 2,607 15,355 1,050 1,577 1,320 2,399 1,616 487 766 698 511 RIBA Business Benchmarking - 2015 Report Page 10

1.6 Staff numbers by gender Overall, 65 per cent of staff working in architectural practices are male, 35 per cent are female. The figure for permanent staff is 65 per cent male and 35 per cent female, compared with 68 per cent male and 32 per cent female amongst freelance staff. The proportion of male/female staff is remarkably similar for all but the very smallest practice size. In a one person practice, the overwhelming majority of staff 84 per cent are male, and 16 per cent are female. But for all other practice sizes, female staff account for between 34 and 37 per cent. Analysed by staff type, across all practice sizes, the proportion of women in the workforce declines with seniority. Between 41 and 42 per cent of Architectural Assistants are female, as are 40 per cent of recently qualified Architects (registered for less than five years), falling to 29 per cent of more senior Architects (registered for five years or more). The proportion of females falls even further to 24 per cent of Associates, 20 per cent of Salaried Partners or Directors, and to just 17 per cent of Equity Partners, Directors or Sole Principals. This low of 17 per cent is the lowest proportion of females amongst any of the staff categories. There is one staff group which is the exception to this relationship between the number of females and seniority; Technologists. Just 18 per cent of Technologists are female. There is only one staff group where women out-number men; in office management, support and administrative roles. London practices employ more female staff than any other part of the UK; in the capital, 39 per cent of practice staff are female, compared with the UK average of 35 per cent. But in only one other region is the national average exceeded: just over 35 per cent of the staff employed by practices in Wessex are female. Regions where practices employ the lowest numbers of females are the East Midlands (27 per cent) and Yorkshire (28 per cent). Table 1-5 Gender of staff analysed by staff type per cent permanent freelance ALL STAFF equity Partners, shareholder Directors, or Sole Principals salaried Partners or non-shareholder Directors male female male female male female 83 17 n/a n/a 83 17 80 20 n/a n/a 80 20 Associate Directors or Associates 76 24 74 26 76 24 Architects (5 years + ARB registered) 72 28 75 25 72 28 Architects (<5 years ARB registered) 60 40 74 26 61 39 Technologists 85 15 77 23 84 16 Architectural Assistants (Part 2) 60 40 59 41 60 40 Architectural Assistants (Part 1) 59 41 56 44 58 42 other Chartered constr. professional 66 34 88 12 71 29 other fee earning staff 57 43 65 35 58 42 office management / support & admin 24 76 30 70 25 75 ALL 65 35 68 32 65 35 Table 1-6 Gender of staff analysed by size of practice per cent permanent freelance ALL STAFF male female male female male female 1 85 15 23 77 84 16 2 64 36 59 41 64 36 3 to <5 69 31 57 43 67 33 5 to <10 65 35 60 40 65 35 10 to <20 66 34 67 33 66 34 20 to <50 65 35 66 34 65 35 50 + 64 36 75 25 65 35 ALL 65 35 68 32 65 35 RIBA Business Benchmarking - 2015 Report Page 11

1.7 Legal status of practice The majority of architectural practices are established as limited companies. This is the case for over 70 per cent of practices with more than 3 staff and even 47 per cent of one person practices. Just 9 per cent of practices are established as Limited Liability Partnerships (LLPs) although the proportion increases with practice size, so that 18 per cent of 20 to <50 and 23 per cent of 50+ practices are established in this way. The traditional Partnership is used by 6 per cent of practices. Although 15 per cent of practices overall are Sole Traders, this is mainly the case for very small practices, including 51 per cent of one person practices. Chart 1-9 Legal status PLC Sole Trader Others Partnership Limited Liability Partnership (LLP) Overall, 83 per cent of practices are registered for VAT; although this proportion falls for the very smallest practices: 65 per cent of two person practices are VAT registered but just 30 per cent of one person practices are. The lower levels of VAT registration amongst one and two person practices makes them more competitive for design work commissioned by private individuals. Limited Company (Ltd) Table 1-7 Legal status of the practice per cent practice size Partnership 1 12 8 7 6 5 3 6 Limited Liability Partnership (LLP) 1 5 6 9 12 18 23 9 Limited Company (Ltd) 47 61 72 78 81 76 72 70 Public Limited Company (PLC) 0 0 0 0 0 1 0 0 Sole Trader 51 22 14 6 1 1 1 15 Charitable Trust 0 0 0 0 0 0 0 0 Co-operative 0 0 0 0 0 0 0 0 Employee Trust (oprofit sharing) 0 0 0 0 0 0 2 0 Local Authority 0 0 0 0 0 0 1 0 not sure 0 0 0 0 0 0 0 0 ALL 100 100 100 100 100 100 100 100 VAT registered 30 65 89 98 99 100 100 83 Chart 1-10 (right) Whether practices are VAT registered not registered VAT registered RIBA Business Benchmarking - 2015 Report Page 12

1.8 Number of offices Most Chartered Practices operate from just one office. A majority of all practices with under 50 staff have one office. Even 44 per cent of practices with 50 or more staff have one UK office. Twenty one per cent of practices with 20 to <50 staff have a second UK office; 6 per cent have a third. In practices with 50 or more staff, 18 per cent have two offices, another 18 per cent three, 8 per cent four while 12 per cent have five or more UK offices. Chart 1-11 Number of offices (UK only) 3 offices 2 offices 5 or more offices 4 offices Table 1-8 Number of offices operated by practices (UK only) 1 office per cent practice size OFFICES WITHIN THE UK: 1 office 99 97 96 93 86 69 45 89 2 offices 1 3 5 7 11 23 18 8 3 offices 0 0 0 0 2 6 18 2 4 offices 0 0 0 0 0 1 8 0 5+ offices 0 0 0 0 0 1 12 1 ALL 100 100 100 100 100 100 100 100 per cent region South Wessex South South London West East East North York- North Wales Scot- N. Ire- West East Mids Mids West shire East land land OFFICES WITHIN THE UK: 1 office 92 95 90 86 91 87 85 92 88 80 92 75 81 90 2 offices 6 4 7 10 6 12 9 6 10 11 8 13 12 10 3 offices 0 1 1 2 1 0 2 2 2 7 0 8 5 0 4 offices 1 0 0 0 0 0 2 1 0 2 0 0 0 0 5+ offices 1 0 1 1 1 1 1 0 1 1 0 4 2 0 ALL 100 100 100 100 100 100 100 100 100 100 100 100 100 100 RIBA Business Benchmarking - 2015 Report Page 13

Revenue 2 2.1 Total Revenue - all Chartered Practices Chartered Practices generated 2.4 billion worth of revenue in the 12 months up to May 2015. 1.4 billion of this, or 60 per cent of total practice revenue, was earned by the 120 practices with 50 or more staff. This compares with these same practices employing 50 per cent of all staff employed throughout Chartered Practices. Clearly large practices contribute disproportionately to the total market. Contrast the 1.4 billion revenue of the 120 largest practices with a revenue of 14 million, generated by the 318 one person practices (0.6 per cent of the total share). Total revenues have increased in each of the last four years; the increase in the last 12 months is the sharpest, at 28 per cent. While it is to be expected that the largest practices produced the greatest share of revenues, it is perhaps more surprising to find just how dominant one region is in terms of architectural revenue. The figures show an extreme geographic concentration of the profession s earnings; London based practices account for as much as 55 per cent of total architectural revenue (see Table 2-3). Chart 2-1 Total architectural revenue: Trends 2012 to 2015 total practice revenues, billion 2.5 2.0 1.5 1.0 0.5 0.0 2012 2013 2014 2015 Source of back data: previous RIBA Business Benchmarking surveys, 2011/12 to 2013/14 Chart 2-2 Comparison of share of total practice revenue, by size of practice, with share of total staffing and total number of practices share of number of practices share of all practice staff share of all practice revenue 0 20 40 per cent share 60 80 100 practice size: number of staff 1 2 3 to <5 5 to <10 10 to <20 20 to <50 50 + RIBA Business Benchmarking - 2015 Report Page 14

2.2 Practice Revenue by size The average revenue per practice, for different practice sizes, is shown in Table 2-1 below. A quick technical explanation; we report both the mean average, and the median average the latter shows the middle value when all practice revenues are sorted in size order, while the lower and upper s show the practice revenue for a practice at the one quarter, and three quarters position in this same ordered list. There is some difference between mean averages and median averages the mean average can be adversely affected by extremely high (or low) values. For the sake of consistency, and simplicity, we have chosen to generally report figures as mean averages although we have selectively included median averages, where we feel this might be helpful,. The difference between mean and median averages when analysed by practice size is generally no greater than 20 per cent, except for the largest practice size (50+ staff) where there is the widest variation in reported values. The figures show that for a practice with between 5 and <10 staff, the mean average revenue is 319,000. The median average value is 283,000 although the range of values reported is large one quarter of practices in this size group generated a fee revenue of 195,000 or less; while another quarter earned revenues in excess of 394,000. Throughout the practice sizes, there is considerable variation in the figures provided, as is demonstrated by the gap between lower and upper figures. Even in practice sizes of one or two staff, where the variation cannot be explained by having a range of staff, the upper figure is more than double the lower figure. The comparison over time suggests average (mean) practice revenues have been fairly flat for most practice sizes, with a more significant variation only for the largest practices although even here there is no clear trend over the four years. Chart 2-3 Average practice revenue per practice average (mean) practice revenue 12000000 10000000 8000000 6000000 4000000 2000000 0 1 2 3-<5 5-<10 10-<20 20-<50 practice size: number of staff Chart 2-4 Average revenue per practice, selected practice sizes: Trends 2012 to 2015 average revenue per practice, million 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2012 2013 50+ (right hand scale) 20 to <50 (left hand scale) 10 to <20 (left hand scale) 2014 5 to <10 2015 50+ 15.0 12.5 10.0 7.5 5.0 2.5 0.0 average revenue per practice, million Table 2-1 Average practice revenue, analysed by size of practice Source of back data: previous RIBA Business Benchmarking surveys, 2011/12 to 2013/14 average practice revenue MEAN lower MEDIAN upper 1 43,225 20,424 36,919 57,520 2 74,518 40,000 62,900 96,663 3 to <5 152,054 81,748 130,000 182,659 5 to <10 319,433 195,128 283,051 393,914 10 to <20 784,393 544,942 719,895 967,302 20 to <50 2,024,267 1,315,244 1,744,397 2,356,668 50 + 11,853,293 4,183,656 6,137,193 11,315,360 ALL 1,055,480 74,569 216,769 637,613 RIBA Business Benchmarking - 2015 Report Page 15

2.3 Practice Revenue per head The average revenue per head figures are more precise benchmarks than the average practice revenue figures, because for practices with a range of staff (practice size 3 upwards) the figures are divided by the precise number of heads. So average per head figures are directly comparable across the practice sizes. And the figures show a consistent finding that average revenue per head rises in line with practice size. The more heads a practice has, the higher the average revenue per head. This is absolutely consistent for every indicator examined see Table 2-2. So, the average revenue per Principal in a 3 to <5 sized practice is 110,000 but this rises to 367,000 in a 10 to <20 sized practice. The rises continue, although to a smaller level of magnitude, when looking at revenue per all fee-earning staff: in a 3 to <5 sized practice the figure is 52,000 which then rises to 66,000 in a 10 to <20 sized practice. Chart 2-5 Average practice revenue per head - Partners, Directors, Sole Principals Chart 2-6 Average practice revenue per head - all fee earning staff average (mean) practice revenue per head, 1500000 1200000 900000 600000 300000 0 1 2 3-<5 5-<10 10-<20 20-<50 practice size: number of staff 50+ average (mean) practice revenue per head, 100000 80000 60000 40000 20000 0 1 2 3-<5 5-<10 10-<20 20-<50 practice size: number of staff 50+ Table 2-2 Average practice revenue per head per head average (mean) practice revenue per head per Partner/Director/Sole Principal 42,826 55,102 109,607 187,429 366,827 635,050 1,269,264 262,418 per Architect 42,786 51,692 79,633 100,015 123,868 161,849 190,149 96,121 per Architectural Staff 42,742 44,331 54,583 57,212 71,724 90,173 118,394 61,536 per all Fee earning Staff 42,717 43,310 51,601 53,203 66,297 77,425 91,605 56,424 RIBA Business Benchmarking - 2015 Report Page 16

2.4 Revenue by region Chartered Practices in London generate 56 per cent of total revenues raised by all practices in the latest financial year. This compares with London s practices employing 47 per cent of all the staff employed in Chartered Practices. Chart 2-7 Average revenue by region Average (mean) revenue per practice figures by region will be heavily influenced by the presence or absence of very large practices. Therefore, it is not surprising to see average practice revenues are highest in London at 1.6 million. Although second highest is the average for practices in the East Midlands, at 1.2 million. Average practice revenues are above 900,000 in the South, Yorkshire and Wales. Lowest average (mean) practice revenues are reported by practices in the East and Wessex. avearge revenue per practice 1.5 m and over 900,000 to 1.49 m 550,000 to 899,999 under 550,000 The average practice revenues are somewhat different when looking at the median average; the presence of very large practices, with very high revenues, in some regions does, or course, affect the mean value. Median values are lower - usually substantially lower - in every region. Perhaps surprisingly, the median practice revenue is not highest in London; it is higher in Scotland and Northern Ireland. Table 2-3 Average revenue per practice, analysed by region average practice revenue TOTAL practice MEAN lower MEDIAN upper revenue South West 542,400 72,048 181,690 462,651 86,241,523 Wessex 344,517 51,878 182,866 450,640 25,838,762 South 968,914 89,050 225,011 629,131 131,772,357 South East 719,457 56,906 154,270 425,329 174,828,111 London 1,635,107 83,342 255,105 910,160 1,316,260,833 West Midlands 605,976 87,714 254,541 562,262 61,203,531 East Midlands 1,179,839 61,819 205,953 616,304 100,286,274 East 402,269 61,281 218,278 427,579 62,351,695 North West 888,866 76,000 189,676 524,069 146,662,902 Yorkshire 966,398 73,559 203,357 610,046 113,068,543 North East 583,743 80,000 220,503 519,870 28,603,414 Wales 936,439 66,484 135,496 385,006 49,631,261 Scotland 847,365 180,677 405,000 1,181,822 36,436,706 Northern Ireland 526,760 96,000 258,198 667,384 25,811,261 ALL 1,055,480 74,569 216,769 637,613 2,358,997,173 RIBA Business Benchmarking - 2015 Report Page 17

2.5 Revenue by type of work Average practice revenues are divided fairly evenly between new build and refurbishment work. Thirty five per cent of revenue is generated from new build work; 32 per cent for refurbishment, and 21 per cent is from jobs which are both new build and refurbishment. However, when examined by practice size, the distribution of work between the two is far from equal. In 1 or 2 person practices, about twice as much revenue is generated from refurbishment only jobs compared with new build only jobs. The relationship switches for larger practices so that by size group 10 to <20 staff, 42 per cent of revenue comes from new build only jobs, compare with 27 per cent from refurbishment only. New build dominates even more as size increases so for practices with 50 or more staff, 60 percent of revenue comes from new build only compared with just 18 per cent from refurbishment only jobs. Chart 2-8 Source of practice revenue - type of work both new build and refurbishment conservation refurbishment other new build Conservation work accounts for an average 6 per cent of practice revenue, being between 6 and 8 per cent for practices of up to 20 staff - and less than this for larger practices. Revenue from other sources accounts for between 5 and 8 per cent of revenue in practices of all sizes. Table 2-4 Average practice revenue, analysed by type of work per cent average (mean) per cent of practice revenue new build 21 24 30 38 42 52 60 35 refurbishment 43 40 32 30 27 22 18 32 both new build and refurbishment 23 23 24 20 18 17 12 21 conservation 6 7 8 7 6 3 2 6 other 7 5 6 5 7 6 8 6 ALL 100 100 100 100 100 100 100 100 per cent South West South South East new build 38 33 36 35 32 39 40 41 35 40 36 36 37 46 refurbishment 27 24 28 32 37 28 31 28 30 29 30 30 37 21 both new build and refurbishment 21 32 24 22 20 21 15 18 20 18 17 21 14 23 conservation 7 8 7 6 5 7 8 9 8 5 9 9 7 4 other 6 5 4 5 7 5 6 4 7 7 8 4 6 8 ALL 100 100 100 100 100 100 100 100 100 100 100 100 100 100 North East Wales Wessex average (mean) per cent of practice revenue London West East East North Yorkshire Mids Mids West Scotland N. Ireland RIBA Business Benchmarking - 2015 Report Page 18

2.6 Revenue by sector More than half of practice revenue in practices with under five staff comes from one sector one-off housing. This work includes house extensions and alterations. For one person practices, this sector accounts for 69 per cent of revenue. Even in medium sized practices with fewer than 20 staff, one-off housing accounts for at least a quarter of total practice revenue. Other private housing is the second most important sector for the profession, accounting for 14 per cent of revenues. Unlike one-off housing, the remainder of private housing represents a fairly similar proportion of revenues, of between 12 and 16 per cent, across all practice sizes except one person practices. Generally, as practice size increases, there is more diversification between sectors and less of a concentration on private housing. For practices with 10 or more staff, education becomes the next most important sector, accounting for between 12 and 16 per cent of revenues for these larger firms. The relative importance of commercial work increases by practice size, so office work accounts for over 5 per cent of revenues for practices with 5 or more staff, while retail accounts for over 5 per cent in practices with 10 or more staff. Sport and leisure is the source of 6 per cent of revenues in practices with 20 or more staff. Chart 2-9 Source of practice revenue - sector public housing education health industrial culture / entertainment sport / leisure retail offices others other private housing one-off house, extension Table 2-5 Average practice revenue, analysed by sector of work per cent average (mean) per cent of practice revenue one-off new house, extension, conversion, alteration 69 63 50 36 24 9 2 41 other private housing 8 12 13 16 15 16 16 14 offices 2 3 4 6 6 8 13 5 retail 2 2 4 4 5 9 9 4 sport and leisure 1 2 2 4 4 6 6 3 culture and entertainment 2 2 4 4 4 4 4 3 industrial 1 2 3 3 4 3 3 3 health 1 1 3 3 6 7 5 3 education 3 4 6 7 12 16 16 8 public housing incl. social housing 1 1 3 7 7 8 7 5 transport 1 0 0 1 2 1 5 1 mixed 3 3 3 4 4 2 4 3 other private 3 3 3 4 4 3 3 3 other public 2 2 3 2 3 3 3 2 ALL 100 100 100 100 100 100 100 100 RIBA Business Benchmarking - 2015 Report Page 19

per cent South West South South East Chart 2-10 Proportion of practice revenue from main work sectors, by practice size average (mean) per cent of practice revenue London one-off new house, extension, conversion, 50 48 45 51 42 27 40 42 30 32 25 42 29 27 alteration other private housing 15 12 16 11 15 14 12 15 11 16 11 9 8 8 offices 3 6 3 3 7 5 5 3 7 5 6 4 9 6 retail 3 2 3 4 4 3 7 5 5 8 7 6 5 8 sport and leisure 3 3 3 3 3 3 3 2 5 3 5 3 8 7 culture and entertainment 3 4 3 3 4 5 3 3 3 2 5 2 4 3 industrial 2 4 3 2 1 4 7 3 4 7 4 4 8 6 health 3 4 3 3 2 9 3 4 4 5 5 4 6 5 education 7 10 9 8 6 12 9 9 10 8 9 8 9 10 public housing incl. social housing 4 2 5 4 4 10 5 6 7 4 11 8 5 8 transport 0 0 0 1 1 0 0 0 1 1 0 1 1 3 mixed 2 3 3 3 4 3 2 3 5 3 5 4 5 4 other private 2 2 3 3 3 3 2 3 5 3 5 4 5 4 other public 2 2 2 2 2 3 2 2 5 3 5 2 3 0 ALL 100 100 100 100 100 100 100 100 100 100 100 100 100 100 West Mids East Mids East North West main work sector North East Wales Wessex Yorkshire Scotland N. Ireland 1 other public practice size: number of staff 2 3-<5 5-<10 10-<20 20-<50 health/education mixed/other private private commercial private housing 50+ 0 20 40 60 80 100 per cent revenue RIBA Business Benchmarking - 2015 Report Page 20

2.7 Revenue by type of client Private individuals emerge as being the most important clients in terms of revenue, accounting for 41 per cent of the profession s revenue. This proportion is substantially higher for small practices, accounting for over 60 per cent of revenues in 1 or 2 person practices and over 50 per cent in 3 to <5 practices. The importance of this group declines rapidly after this, falling to just 2 per cent in 50+ practices. As the importance of private individuals declines for medium and large practices, a more diverse range of clients, including property developers, contractors, limited companies and corporations, takes their place. Property developers are the most important of these, accounting for over 20 per cent of revenues for practices with 5 or more staff. Local authority clients account for over 5 per cent of revenues of practices with 10 or more staff; other public bodies account for at least 8 per cent of the revenues of practices with 10 or more staff. Central government only represents about 3 per cent of revenues for these same sized practices. Chart 2-11 Source of practice revenue - client type other public local/central government limited / PLC contractor developer others individual Table 2-6 Average practice revenue, analysed by type of client per cent average (mean) per cent of practice revenue individual (eg house owner) 69 63 51 37 26 10 2 41 property developer 12 14 16 22 21 23 25 19 contractor 2 4 4 7 11 16 21 7 Limited Company (Ltd) 6 7 9 12 11 15 15 10 Corporation (PLC) 1 0 2 3 6 9 10 3 central government 0 1 0 1 3 3 4 1 local government 1 1 3 4 5 8 6 4 other public body 2 2 5 5 8 8 9 5 not for profit 4 4 6 6 6 5 4 5 other 2 3 3 3 4 3 4 3 ALL 100 100 100 100 100 100 100 100 per cent South West South South East individual (eg house owner) 51 49 47 50 42 28 41 43 33 32 27 44 29 26 property developer 17 16 16 17 22 20 15 18 17 16 17 12 12 12 contractor 7 6 7 6 6 11 10 8 9 11 13 14 9 7 Limited Company (Ltd) 7 9 10 8 9 13 15 9 12 13 14 9 16 15 Corporation (PLC) 2 1 2 3 4 5 4 2 4 8 2 3 4 4 central government 1 0 1 1 1 2 0 1 3 1 0 1 4 9 local government 4 4 4 5 3 5 4 3 4 3 6 5 6 7 other public body 3 5 5 2 4 7 5 6 8 7 7 6 10 11 not for profit 4 7 4 5 4 8 2 8 6 6 9 4 4 5 other 3 3 4 3 3 3 3 2 4 2 4 2 5 2 ALL 100 100 100 100 100 100 100 100 100 100 100 100 100 100 North East Wales Wessex average (mean) per cent of practice revenue London West East East North Yorkshire Mids Mids West Scotland N. Ireland RIBA Business Benchmarking - 2015 Report Page 21

2.8 Revenue by type of service About half (49 per cent) of practice revenue is derived from offering a full service to clients. This corresponds with RIBA Plan of Work 2013 Stages 1-6. Moreover, this proportion is almost the same for every practice size, ranging from between 45 per cent for the largest practices (50 or more staff) to 52 per cent for size group 3 to <5 staff; a very consistent proportion across all practices sizes. One quarter (25 per cent) of practice revenues come from offering services at Stages 1 to 3 only, while much less, 9 per cent, of the average practice s revenue comes from offering RIBA Plan of Work Stages 4 to 6 only. While the proportion of practice revenues coming from RIBA Plan of Work Stages 1 to 3 only declines with practice size (32 per cent of revenue in practices with 1 or 2 staff compared with 21 per cent in practices with 50 or more staff), the opposite is the case for the proportion of practice revenue derived from RIBA Plan of Work Stages 4 to 6 only (12 per cent in practices with 20 or more staff compared with 6 per cent in 1 person practices). Very small proportions (less than 5 per cent) of practice revenue are derived from any one of the consultancy services; these are detailed in Table 2-7. Table 2-7 Average practice revenue, analysed by type of service per cent average (mean) per cent of practice revenue BUILDING DESIGN Full Service, RIBA Work Stages 1 to 6 or more 48 48 52 50 48 49 45 49 RIBA Plan of Work Stages 1 3 only 32 32 24 24 22 20 21 25 RIBA Plan of Work Stages 4 6 only 6 7 8 9 10 12 12 9 ALL BUILDING DESIGN 87 87 85 82 80 81 78 83 CONSULTANCY project management / contract management 1 2 2 2 3 1 1 2 landscape design 0 0 0 0 1 1 2 0 interior design 1 1 2 3 3 4 5 2 feasibility studies 3 3 4 4 4 4 4 4 urban design / spatial planning 0 0 1 1 1 1 2 1 master planning 0 0 1 1 2 3 4 1 conservation work 2 2 2 3 2 2 1 2 certification work 0 0 1 0 0 0 0 0 property valuations 0 0 0 0 0 0 0 0 Client Adviser Services 1 1 1 0 1 1 1 1 post occupancy services 0 0 0 0 0 0 0 0 other or other partial services not included above 3 3 2 2 2 3 3 3 ALL CONSULTANCY 13 13 15 17 20 19 22 17 ALL 100 100 100 100 100 100 100 100 RIBA Business Benchmarking - 2015 Report Page 22