The word "commoditization" has a negative connotation because people associate it with “cheap.” They assume this means that everyone conforms to providing a similar product. This may be true for paper, pens, or tape, but it isn’t and won’t be the case for A/E design services.
Architecture and engineering are more than products – they are art. They require skills not readily available “off the shelf.” Our end product isn’t able to be liquidated.
Price isn’t the end all be all to a lot of clients, either. Believe me. I’ve been 20% under my competitors several times and not gotten the job. My guess is that they probably thought I missed something or that I don’t know what I’m doing.
That’s a fair assumption on the owner’s part if they only have three bids to compare. But what if the owner had 50 bids reviewed for them? What if the standard deviation of those bids now puts the previous winner in the top 90% of cost and the majority of folks were priced where I was for those bids?
The owner wins, because now they know what the project should cost and can focus on other factors like schedule, percent in market, or a host of others. The A/E firms win because they get their brand, their concept, and their bid presented in an unbiased manner.
They get feedback from PAEVEN as to where they placed in those categories as compared to their competitors. The firms that have found a way to do a project from a more innovative standpoint are more likely to be rewarded.
The reason I don’t condemn commoditization is because it takes a monopolistic market and transforms it to a competitive marketplace (I talk more about this on our About Us page). From an engineering standpoint, we are always looking for a better way to do things or a more efficient way of doing things.
If not, why would we take CE? Why would be buy or read PSMJ? We are learning from each other so that as we develop best practices we can implement new and innovative ideas and make them commonplace. We are pushing the limits.
We accept that it is best to analyze skyscrapers with computer programs, not by hand. We accept that it is more time efficient to use computer modeling or drafting rather than drawings by hand. Both of those examples could be called commodization, yet the industry adapted.
Our goal with PAEVEN is to find those forward thinking innovators, not those hesitant to embrace technology.
About the Author: Jared Perry is a principal at Sixmo, an A/E consulting firm, and the founder of PAEVEN, a website and technology company designed to support growth and competition in the AE industry. He can be reached at jperry@paeven.com.
For more information, click here to read a recent Q&A with Jared on the the launch of PAEVEN, a Private Sector Bidding Platform for A/E RFPs.
PSMJ is always looking to publish diverse views on emerging issues and trends in the A/E/C industry. We invite you to submit a 500-word post on any industry-related topic. We look forward to hearing from you.
In the PSMJ Blog, we have covered technology and the A/E industry from a number of angles. Here is a list of technology-related blog posts:
10 Tips for Effective Project Management with BIM
Where 3D Printing Plays in the A/E/C Arena
5 Tips on How to Survive the Marketing Tech Madness
The New Technology That Will Transform the A/E Industry