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Bos-de Vos, M, Volker, L and Wamelink, H (2016) Real Estate Development by Architectural Firms: Is the Business Model Future-Proof?. In: Chan, P W and Neilson, C J (Eds.), Proceedings 32nd Annual ARCOM Conference, 5-7 September 2016, Manchester UK. Association of Researchers in Construction Management, 1049–1058.
- Type: Conference Proceedings
- Keywords: business model, value capture, value creation, value proposition.
- ISBN/ISSN: 978-0-9955463-0-1
- URL: http://www.arcom.ac.uk/-docs/proceedings/60d4bad20eab3767ab267c4bae41de63.pdf
Architectural firms are involved in various projects and have to deal with different stakeholders and aims. As each project is unique, the potential value of the architectural service is often not clear in the beginning and evolves during the design process. To create and capture value in an effective and efficient way, architectural firms need business models that are able to deal with both variety and uncertainty.
In literature, the business model concept has been used to describe how firms create and capture value together with their partners. Although professional service firms are widely recognized as a distinct and important category of firms, little research has been done on how these firms do business. In this study, business model theory is used to develop a better understanding of the business of architectural service delivery. By identifying pitfalls and opportunities of current business models of architectural firms, the aim is to uncover possibilities for enhanced value creation and capture, taking into account the needs of both architects and clients.
Iterating between literature and empirical data from forty semi-structured interviews with Dutch architects and clients, examples of architectural service delivery were systematically translated into business model components and configurations. The components and configurations were further examined regarding their influence on service outcome. Preliminary findings point toward the pivotal role of the value proposition. Value propositions that easily convince clients often result in a higher fee for the architectural firm. They minimize tensions in the architect-client interaction process and enhance outcomes in terms of architect and client satisfaction as well as firm viability.
This study contributes to theory and practice by providing insight into key components, interrelationships, constraints and possibilities of business models for architectural service delivery. It helps practitioners to develop future business model alternatives to enhance benefits for architectural firms while respecting the aims of their clients.