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Earning through innovation

Published:Sunday | April 4, 2010 | 12:00 AM
Chadrick Lim sang, director of operations, Form Architects. - Ricardo Makyn/Staff Photographer

Avia Collinder, Business Reporter

There are times in business when small is good, according to the principals of Form Architects Limited, who say they have proven this maxim. Had Form been a bigger company with larger overhead costs, the company might not have survived 2009, they told Sunday Business.

"We have clients who are unable to continue payments," said Chadrick Lim Sang, director of operations.

He explained that since last year the revenue fall-off has been massive.

Many clients, he said, have put their building plans on hold, citing increased costs arising from the new tax package the Government imposed in January and the projected loss of earnings on investments from the recently imposed Jamaica Debt Exchange, which will result in a major interest-income decline for persons who had banked on huge investment returns from government bonds.

"All of this affects our ability to earn significant income. We made a loss in 2009, but it could have been more significant ifwe were a larger company with more overheads," he said.

The architects did not give details of their operating costs or cash flow.

But according to Lim Sang, they have been able contain costs by the way they structure the operation.

"Most of the work is done by the directors. Our asset base is small and is directly related to our fixed assets offurnitureand equipment. We are a small business focused on having a technological edge. There is not much else."

Primary costs

Form currently rents office space from the Technology Innovation Centre located on the campus of the University of Technology on Old Hope Road in St Andrew.

Primary costs includeutility bills. Revenue is said to be enough to cover about 80 per cent of this with the balance funded out of the pockets of the directors.

"Unfortunately, our operational cost overran our revenue for the period 2008-09. However, as we are a small business, the impact was not as damaging as it could have been," the company's spokesman said.

Another positive for them is that fact the the company is debt free, having been started with the out-of-pocket funds of the directors, Lim Sang pointed out.

At the Technology innovation centre, where the business has been since start-up,the firm benefits from printing services, which is said to be important for the paper-intensive businessof architectural design.

With 2009 having been a slow year, they are nevertheless optimistic that 2010 will be a better one for their business.

Projects startedin 2009 but not yet completed include designs for a $54-million private home, a job on which Form Architects will pocket a percentage of the building costs.

The company went aftera number of government contracts in 2009, winning only one, for which construction is yet to begin.

"We have also started designwork on two or three private homes, none of which has started construction yet.Everyone has been feeling the economic pinch," said Lim Sang.

The collection process

Even where there is business coming in, the director of operations says collection is often a problem.

"Everyone's cash flow is down and some (clients) do not even have an income."

Form Architects Limited specialises in environmental planning and architectural development for a wide range of projects and building types. Apart from Lim Sang, the other principal shareholders in the two-year-old company are Damian Edmond, who is managing director, and Richard May, directorof design sustainability. They are the firm's only employees.

The projects they undertake vary significantly in budget, scale, and type. They include a variety of residential and commercial structures ,as well as leisure facilities.

Among the projects the young architectural outfit completed recently are a number of homes made of environmentally friendly building materials.

Of course, the cost ofthe design servicesvariesaccording to the scope of the project being undertaken and the precise nature of the services required. The architects normally get paid for their work in phases concurrent with the completion of each stage of the building project in which they are involved.

The operators of FormArchitects Limited say theyare committed to a high standard of architecture within an ecological and sustainable framework.

"We seek to design modern environments that are responsive to the tropical climate of the region, to the people (who will use them) and (to) their lifestyles," the company profile states.

Form Architects Limited, as the principals pointed out, is a fairly new firm in a very old industry, withtheircompetitors being established companies which would have been doing similar work for a long time and possibly with a high success rate and market presence.

But, the new entrepreneurs believe they have something unique to offer as they are more than just architects.

"In the age of consumerism and convenience, technology has afforded us the ability to offer a wider and more diverse product range," said Lim Sang.

While offering basic architectural services, the group also does interior design and graphic redesign of companies' marketing images, a service several clients are said to have been only too happy to take up.

The range of services includes brand analysis, brand conceptualisation and strategy, brand standards, name generation, image development and visual communication.

Interior design servicesinclude conceptual design and development, lighting and furniture design, fixtureand equipment planning, and specifications.

The graphic-design studio offers brand development, graphic identity and logo design, corporate identity, trade show/kiosk exhibits and packaging.

The business also designs furnishings such as beds and chairs constructed from local raw materials.

"We control costs by avoiding importing, although a lot of people are still under the impression that if it comes from abroad, it is better," stated Lim Sang.

In their menu of more general services, Form Architects Limited does architectural designs, master planning, construction documentation, contract administration, architectural measured surveys and project feasibility studies.

The businessmen believe that although, and maybe because, their operation is small, they have the advantage of competitive pricing. "Because of our small overheads we are able to price competitively."

Recommended rates

They are also guided by the recommended rates of the Jamaica Institute of Architects, of which they are members.

Expectations for the industry at large in 2010are speculative at best, as the global economic situation is still affecting development locally, said Lim Sang. But, he hopes that projects now on the 'drawing board' will be actually built as the year moves forward.

"We remain optimistic about future developments and strongly believe in the products and services we provide," the company spokesman said.

The company is also currently building its website, which will allow Jamaicans to purchase plans online as well as select finishes and furniture for their new buildings from the comfort of their home and offices.

"They will no longer need to drive up and down looking at tiles and paints. The website will be a one-stop shop," said the operations director.

Once the website is completed, Form Architects Limited will be going in search of funding to market its services, its directors said.