Architects-office via wikipedia

How AI Will Upend Architecture’s Antiquated Business Model

Frank Stasiowski, CEO of PSMJ/Resource, a management consultancy for architecture, engineering, and construction organizations, has been preaching the virtues of “value pricing” for several decades. This involves determining fees based on the value of design, rather than the time spent creating those designs, which has been the traditional model. He thinks time-based contracts are not only relics of a previous era, but, given the pace of technological change, a road to possible extinction. I recently talked to Stasiowski about the emergence of AI, how it will affect architecture’s fossilized business model, and why the field must embrace the quickly evolving technology to remain relevant.

FS: Frank Stasiowski
MCP: Martin C. Pedersen

MCP:

I’ve talked to a bunch of different people about different aspects of AI, but I wanted to talk to you about how it might impact the business model. What do you think?

FS:

I’m optimistic. It is going to threaten the business model, but the business model has been in trouble for 40 years. The model is pretty much time-based compensation, where architects end up—however they slice it, whatever kind of contract they use, sum or hourly or time of materials—it’s all based on figuring out how many hours it’s going to take to do something. That’s got to go away. And I think that, finally, AI is going to do that, because it’s going to reduce the amount of hours it takes to do a multitude of architectural tasks. 

I’m involved in an event called the Quantum World Congress. Quantum computing is coming down the line. One of the speakers last month in Washington, D.C., where we hosted 1,000 quantum scientists, predicted that by the year 2029, all of our laptops will be replaced by quantum computers working at 400 to 600 times the speed of today’s computers. So when you think about what’s coming down the line, technologically, the business model had better change. It’s got to change to where architects realize that their real input is as consultants to the value stream of real estate. We need to price our services accordingly. The firms that do that will not only survive, they’ll prosper. Unfortunately, I see it as eliminating a whole bunch of old-line firms and replacing them with a whole bunch of firms driven by business-oriented young architects.

MCP:

I talked to Patrick Chopson, who runs what he’s calling an “AI-first architecture firm,” and he’s saying the same thing: “I’m helping clients assume their risk and speeding up that process. That has value.” If he can do it six months faster, the time value of the money easily pays his fee.

FS:

And if the computing power is 400 times faster than today, architects can produce alternatives at a rapid rate, which they can’t do now. I’m talking about fully designed alternatives that allow a client and architect to discuss the pros and cons of each alternative in a way that they can never do before. An architect today produces one schematic, and then they take it apart, go pros and cons. An architect in 2035 can produce 10 schematics, fully developed, all the way down to getting a budget and a schedule, and then have the discussion around 10 alternatives as opposed to one. That will add value to the profession, but it’s going to change who’s in it.

MCP:

How does the job itself change in 10 years with AI, the quantum computing, and the advances happening now? What’s the human architect’s role in 10 years?

FS:

I don’t want to dismiss the importance of design and creativity, but I think creativity is going to be enhanced by multiple selections of things. In my education at RISD, decades ago, you had to do everything by hand. You had to research monstrous libraries of books and samples, and then produce cumbersome details based on knowledge by looking at hard materials. Today that’s all digitized. You can specify things in a different way. That doesn’t eliminate creativity. The architects still will add value by suggesting choices to clients based on a broader array of knowledge. And that knowledge will be machine generated and it’s going to require that architects add to their repertoire a real understanding of AI, quantum computing, and how it will enhance their own practice.

Architects that don’t embrace it will be left behind. Today there are a lot of firms looking at AI for the first time, and they’re afraid of it. They see it as a threat to their staff numbers. And, no doubt, staff numbers will change. You will eliminate redundant tasks. You will eliminate people doing computer-aided drafting, because machines will be able to do that. They’ll do generative AI, which is where you give them a problem and the machine thinks of the alternatives to examine. Those things are already in use in other industries. 

Recently I went to Harvard for a lecture on the use of AI in sports analytics. It absolutely blew me away what the sports teams are doing to understand the background of every fan that sits in attendance at a game. Getting down to the details of how much they earn, who they are, what they do, why they come to the game. They’re doing it with facial recognition, with ticket information, and they’re going to use all that data to do individual seat pricing, if you can believe it, in a 60,000-seat football stadium.

MCP:

For all their prowess, architects are late technology adaptors.

FS:

It took architects 40 years to embrace computer-aided drafting. When I started the AEC System Show in 1979, as a young architect, I wish I could have recorded the architect who told me—he was a very well-known architect—“You’re wasting your time. Architects will never use computers.”

So massive change is what’s going to happen. I can’t predict the exact pace of the change, but I can tell you that the speed of things will be exponentially faster than today. There are currently 5,437 existing data centers. The prediction is that by 2030, there will be 25,000 data centers. So when I look at markets for architects, data centers are certainly an exploding market. The second thing that’s going to be critically important to the future of this data is the use of small nuclear power plants. We’re aware of one project right now in a rustic county in Maine, using small nuclear power to support a massive 115,000-square-foot data center for one of the big seven computer companies. They chose northern Maine because of the cool temperature. It will take less energy to keep those nuclear reactors cool in the northern hemisphere than it would if you put it in Mississippi. So watch for an explosion of data centers along the Canadian border, especially around the Great Lakes, where there’s abundant water for small nuclear power plants to support electricity generation, because they will require monumental amounts of it. If I’m starting a firm right now, I want to do data centers, I want to do healthcare, I want to investigate everything I can find out about nuclear power in small nuclear generators, the new ones that people like Bill Gates are buying to power his installation in the Midwest.

 

Frank Stasiowski headshot smaller
MCP:

Considerable investment is required for AI. You’d think that the Genslers of the world could pony up the money to buy the technology. Does it favor large firms? 

FS:

From a firm point of view, I think it favors firms that have a culture of youth and risk-taking because there will be risk, no doubt. You have to invest, make mistakes. They’re going to invest in the wrong systems or the wrong software, and it won’t work, and they’ll be set back. Anytime there’s massive change, there are winners and losers, and there will be losers. But if you go back 50 years and look at the names that were the top 10 largest architecture firms in America, I don’t think one of them exists today, with the possible exception of SOM. Most are gone, and they’re gone because they held on to old technology, old ways, old ownership strategies. AI is going to have an impact down into the depths of how we run firms, how we capitalize firms, how we own firms, and it will significantly change the way we educate architects. By the way: The schools are already embracing AI beyond what the profession is, because the schools are where you see a lot of the development in AI.

MCP:

With the students?

FS:

They aren’t afraid of it. They see it as a tool. They’re not saying, This is going to replace us. They’re trying to use it to enhance their knowledge and their capability to get jobs when they get out. The embracing of AI by the schools is an important first step in this, but the firms need to stand up. If I were the head of AIA right now, I’d form a task force of large firm executives to talk about how to change the profession, the way the profession contracts, and the way the profession deals with clients, but I don’t see that happening yet, because things move slowly at the top.

MCP:

The schools are trying to get out ahead of it, but it’s advancing so quickly that it’s almost impossible to get out ahead of it, unless you’re in it. They know what they have to do, but it’s a difficult spot because it’s a fast-moving train. 

FS:

We’re working with a fascinating firm right now, a civil engineering firm, who went into the data center development business and embraced AI. They have 300 people on their payroll and no office facilities. All work virtually. They meet every week multiple times online, and they design and build large data centers for top technology firms, and they’re booming, pulling down a 52% profit rate. They’ve got architects doing the building facilities, engineers doing the engineering, civil engineers doing the site work, and they’re knocking it out of the park.

The risk is if data centers stop, they’re out of business, but they’re becoming the world’s expert in data centers, and doing it virtually. That’s a totally different model. You’re going to see a lot of different models emerge with young people driving it. Now, here’s one of the difficulties: all the licensing requirements for architects are state-bound agreements that are really ancient. You’ve got to take a seven-stage exam. You have to get that damn license if you’re going to be an architect. Unfortunately, these young people are trying to find ways around licensing. You have a lot of people doing stuff without licenses, and you’re going to see more of that because the licensing is so far behind where the technology is right now. But if we embrace the positive parts of AI, then it’s an opportunity for architects to shine like never before. My biggest fear is that the powers in control right now will wait too long to embrace it. 

MCP:

What are the ethical ramifications? Where does this place the idea of human agency? What agency will architects have over their machines?

FS:

That’s an interesting question. My favorite movie of all time is 2001: A Space Odyssey. Kubrick made that movie in the late 1960s, and at one point in the film the computer throws the human off the spacecraft because the computer has taken control. That may come to be. I don’t think it’s going to come to be in the next 10 years, because the ethics and the laws and the fear that humans have of machines taking over will be strong. Now, some things will be tough to change. Building departments are so far behind the mark that it’s unbelievable. They’re Stone Age. They’re still using paper building codes that get updated every five years. Five years is an eternity in computer time, and the whole administrative permitting process and all of that stuff is holding back technology in America.

I call this an “AI threshold,” because we’re just about to step into it. I see it as the same threshold as when Alexander Graham Bell invented the telephone or when Edison’s light bulb came along. Those technologies changed the world. There’s one famous story about Bell, who was asked to present the telephone to a group of 50 Wall Street executives. One executive said he didn’t think the phone would ever be used in business, but it would be used by housewives to call their husbands so they knew what to prepare for dinner when they came home.

Now, 100 years ago, that was the ethic, and the ethic now will change, if we get ahead of this. I’m optimistic that creative architects will use it as another tool to enhance the value that we can deliver to society. If we fight it, we’re going to lose and others will do it—builders, developers—and it’ll replace architects. So architects need to stand up, embrace it, and figure out how it adds value to the client, to society, and how we need to remove the obstacles to using it.

Featured image via Wikipedia Commons.

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