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  • 1.  Cash Flow - Expert Opinion Paper

    Posted 02-15-2011 04:11 PM
    I am looking for a white paper, article or some sort of expert opinion report that discusses cash flow in an architecture business.  Specifically, something that discusses the long-term nature of the design process for larger projects and how that effects cash flow. For instance, our firm executed a design contract in Jan 2008 and after an extensive design process and review committees, the construction documents were completed in October 2010. This is a large, state and FEMA funded institutional project so the timeline was exceptional long, but fairly common for our area.

    I have pulled some information from The Architect's Handbook. Does anyone have any other resources they can suggest?





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    Brooke Odom AIA
    Klee Odom + Klee
    Biloxi MS
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  • 2.  RE:Cash Flow - Expert Opinion Paper

    Posted 02-16-2011 10:22 AM
    Brooke,
    May I suggest you check out the following podcast of Jim Sawyer's 2009 AIA Convention Program:
    Project Finance for Principals and Project Managers

    Use the following link to AIA's Practicing Architecture page:
    http://www.aia.org/practicing/AIAPodnet/pod_sawyer?dvid=&recspec=pod_sawyer

    Also, (though I am not sure it is still available) Lowell V. Getz:  An Architect's Guide to Financial Management AIA Press 1997.

    Jonathan L. Fischel, FAIA




  • 3.  RE:Cash Flow - Expert Opinion Paper

    Posted 02-16-2011 03:30 PM

    Jonathan and Brooke,

    The AIA does digitize out-of-print AIA books from the Archives when we find that people are requesting them. An Architect's Guide to Financial Management, by Lowell Getz, published by the AIA in 1997, is available in the Architect's Knowledge Resource at http://www.aia.org/akr/Resources/PDFS/AIAP016808.

    This topic also came up on the Small Project Practitioners Discussion Forum. View the original post at http://network.aia.org/AIA/AIA/Discussions/Message/Default.aspx?MID=1675. 


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    Nancy Hadley, Assoc. AIA, CA
    Manager, Archives & Records
    The American Institute of Architects
    Washington DC
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    Original Message


  • 4.  RE:Cash Flow - Expert Opinion Paper

    Posted 02-18-2011 08:14 PM

    This is a great topic on which to utilize your MBA, Brooke. Actually, though, two topics are involved here.

     

    'Cash flow' is more of a firm-wide issue: based on all the projects, billings, payments, expenses, borrowings, and investments of the firm, what changes occur to the firm's Balance Sheet accounts, with the net result being Cash increasing or decreasing. Yes, that over-simplifies it, and I can go on-and-on about cash flow, but it seems that cash flow, per se, is not your real issue.

     

    You say that this project, which has taken 34 months(!) to go from schematics through CDs, is "common" down there? Then I am guessing the issue has something to do with how and when you have been able to bill your client, and when you receive payments (which I hope you have received). Have you been billing this client on an hourly basis? If not, if it was intended as a fixed fee of some sort, then I hope there are escalation clauses in the contract - and considering what took 34 months to accomplish, I'm guessing there had to be a lot of changes of scope - and additional services - BIG TIME!

     


    As I said, this is not an issue regarding the firm's cash flow, which is what is addressed in The Architect's Handbook, and in Lowell Getz's book. Rather, although it may be impacting the firm's cash flow, you have a problem that is project specific, one that contractually be addressed, and/or that needs to be considered only in its impact on the firm's overall cash flow.

     

    Please let me know if this is remotely correct, and I will try to provide more specific suggestions.



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    Michael Webber
    CFO/Principal
    A/E Finance
    Downers Grove, IL
    mawebber@amkw.com






    Original Message