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Sales Strategy (Analytical Report)

Architecture Professionals

August 2012

Executive Summary
This report outlines statistical as well as observation analysis of the Architecture profession in Australian job market and suggests possible strategies and areas for the company to focus on. In general, Architecture Industry has experienced a decline and is slowly expected to pick up the slow development of Construction Industry in the next 2 years. The shortage of skilled candidates has been observed in NSW and regional QLD for senior Architecture positions, which should be targeted in the next 6 months. Particularly, design and project leaders with health sector project experience as well as AutoCAD, Revit and ArchiCAD specialists were sought after. NSW is also starting to experience demand for residential construction which should lead to few projects for architects. I plan to make a list of those companies seeking above-mentioned skillsets by analysing the job ads, new projects in the market, industry-trends and cold-calling. For the purpose of satisfying their needs, I plan in parallel to create a pool of suitable candidates out of a large number of architects available in Victoria and Queensland. With a solid candidate base, I would be able to approach firms and straight away offer them a suitable resource. With my projections, it would be realistic to find and close 4 positions by the end of 2012. The detailed analytical report is provided below.

Architecture as a Profession - Analytics

Industry Analysis
Architecture Industry is very closely linked with Residential and Non-Residential Construction development. Australian Construction Industry Forum provides very useful data on current and future forecasts in the sector (reports dated April 2012). Residential Buildings Following a stimulus induced increase over 2009-10, there was a moderate decline in construction over 2011-12. The moderation in residential construction is set to continue into 2012-13, reflecting a tight credit market. However, in light of strong demand for housing and recent rate cut decisions by the Reserve Bank a slow recovery is forecasted over 2013-2015. Locally, a strong grown is also forecasted in Sydney in Residential Buildings in the next 2 years compared that of Melbourne. This should have a slight effect on demand of Architecture Services over this period.

Non-Residential Building Non-residential building continues to stagnate. With non-residential building approvals falling for 13 consecutive months to February 2012, this type of construction is expected to remain weak for the remainder of 2011 12. The outlook for nonresidential building activity is expected to remain weak over the medium term. Office building activity was hit particularly hard during the GFC. Activity slumped, falling from $8 billion in 2008-09 to $5.2 billion by 2010-11. Easy credit conditions at the height of the pre-GFC peak led to oversupply in some key office markets. As the economy begins to recover, the oversupply in some markets are being absorbed, but early indicators suggest that the recovery is being driven by Brisbane, Perth, and some of the other markets (particularly in South East Queensland). The recovery in the larger markets such as Sydney and Melbourne, are expected to be more sluggish.

Industry Overview Conclusion Overall, Construction industry finds itself in oversupply after the GFC and in the following 2-3 years is expected to recover slowly, providing a slow boost to Architecture Profession. Due to a very close association between the sectors, Architecture companies will slowly pick up the demand for their services hence the average hiring rate for Architects is expected to remain low with slightly increasing prognosis in 2014.

Employment Analysis
Overall, the employment of Architects has decreased compared to previous years and it is reported that the median age of the profession is 44 years, which is 5 years more than

in other professions. This means that out of 18.4 thousands of Architects in Australia, 50% are 44 years and above. This implies that if the trend continues and demand will remain constant more than 50% of the profession will age out and retire in another 20-25 years. Which means that in the next 5-20 years Architecture Companies will start to feel the skill shortage created by their experienced staff leaving the job. They will either search for a replacement of the same skill level, which will be extremely hard to find or urgently

focus on hiring young professional and facilitating the knowledge transfer to the new generation of architects.

Job Shortages
Approximately 80% of all Architects are employed in three states: NSW, QLD and VIC, with only NSW registering an official shortage of the Architects in April 2011. Victoria has not experienced shortages in Architects over the 2010-11 period, and Queensland has eliminated its 2010 regional shortage in 2011. New South Wales Personal Observation: 2011 Report states that shortages in NSW were particularly evident for design and project leaders (especially for health sector projects) and for AutoCAD, Revit and ArchiCAD specialists. A pool of high-quality candidates with skills in these fields should be created quickly to approach this shortage. Shortages were especially evident for more senior positions. Junior and graduate vacancies were generally easier to fill. Overall, there were about 30 applicants per vacancy and an average of just over one suitable applicant per vacancy. This average, however, was influenced by a number of vacancies for junior architects that attracted several suitable applicants. Victoria Demand for Architects in Victoria mainly depends on the level of private / commercial construction. Medium density residential construction in and around the CBD appears to be relatively strong as stated in the report; hence the demand seems to be significant and stable. Registration with the Architects Registration Board of Victoria (ARVB) in 2010/11 was 224. This indicates an up and down trend with the current figure trending up from 2009/10. The number of registered Architects is also much greater than in NSW (150) which means that the supply is strong as well. Personal Observation: It might be possible to source skilled candidates from Victoria to the projects in NSW where the shortage of suitable candidates was registered. Queensland In QLD metropolitan employers commented on the particularly large quantity of architects searching for work in Brisbane and the Gold Coast. Regional employers experienced difficulty locating registered, specialist architects, but identified comparatively high interest for graduate positions. The majority of employers referred to levels of experience as the main reason applicants were unsuitable. Employers mentioned a particularly high volume of graduate applicants for vacancies but implied that these graduates did not have enough experience. It was noted that several companies are saving costs by having architects hired to supervise the work of several architect draftspersons and this might become a tendency for whole sector in QLD.

Personal Observation: Overall QLD is a good pool of available candidates which can be utilised. Regional Employers still experience some difficulties with finding suitable Architects who would be willing to stay in Regional QLD. International candidates could be potentially used to satisfy such shortage.

Future Job Forecasts

Statistics show that average age for the profession is relatively high of 44 years and small Gross Replacement Rate of 9.3% represents that currently a very low number of architects leave their job which leads to very low rate of new openings. Within several years, as was mentioned before, the industry may start experience an upcoming shortage of skilled architects as many will start retire and the younger generation are not experienced enough.

Overseas candidates
As per current Department of Immigration policies, Overseas Architects are able to apply and acquire long-term as well as permanent sponsorship visas to stay and work in Australia, as their profession is still listed in the Consolidated Skills Occupation List. These visas are currently No.1 priority for Department of Immigration, thus the average processing time for them has been reduced to 2weeks-2-3months time. The Australian Government is very open to invite international candidates to satisfy the apparent shortage of skilled Architects in Australia. On another hand, statistics from Architect Registration Board in each state shows that in reality a very small number of overseas architects make it to the registration. In 2010, there were only 30 registrations processed in NSW for architects who came from overseas, compared to 150 of local architects. In VIC it was only 16 compared to 244 local.

1. Locally a shortage of Architects in NSW was highlighted in Healthcare Sector Projects as well as for AutoCAD, Revit and ArchiCAD specialists, which can be met by sourcing candidates from rich pool of Architects in Victoria and QLD. 2. Residential Construction in NSW is slowly picking up and should be targeted as well. 3. A shortage in Regional QLD can also be satisfied by international candidates from both NSW and VIC, however international candidates should only be used if there is no local alternative due to time and logistic problems associated with sourcing of such candidates. 4. In the next 10-20 years as large number of Architects begins to retire, the industry will experience significant shortage of skilled labour which could not easily be satisfied by either local inexperienced Architects or small number of international professionals..