Forward Thinking: Forecasting for the New Year
As the year draws to a close, design and architecture firms look ahead to the many exciting projects the next 12 months looks set to bring.
With that comes the forecasting of demand; the estimating of requirements and the facilitation of how these projects are going to be delivered and at what cost.
Ahead of INDEX 2017, we learned that this was one area the community was keen to learn more about and refine, so gathered a pool of expert panelists for our Design Talks to dissect exactly how best to not only forecast, but forecast right.
Below, they each explain the steps that they take to make sure they are best prepared for heading into the New Year…
Abdoullah Albizreh, Architect, Summertime Interiors“You want to align your business with the demand. We forecast at the beginning of each year to see how many people we have to hire, if we’re going to grow and by how much to make sure we meet the demand of the next year to maximize our company’s profitability.
“At the end of the year we do our general forecast using three methods to crosscheck. We use regression models which I find are very accurate. We then crosscheck them at the end of the year to see how close we were to expectation. Our biggest variant was 12%, whereas we’re usually only around 2%. So it’s good. The other way to forecast is to look at your carry-forward for next year, which for us is around 60% in terms of what we’ll do in the next year. We also check on sales for our weighted average for projects in the pipeline, which gives us a fairly accurate indication.
“All of these are tools that give you a scientific approach, but what you really need to know at the end is some management interpretation: you need to understand the micro-economy. It’s a little like trading on the stock market – you need to understand your company and how the whole economy is working, to be able to make a better guess. So it’s a little bit scientific and a little bit of intuition, that’s how we forecast. For interiors, what do you have as base building coming into the pipeline? You can look at square metres coming in for the workplace sector, for example, but the problem can be empty spaces. Sometimes there’s a gap there.”
Kenneth Turner, Director, CallisonRTKL“I probably have a slightly different perspective on forecasting. Mine is more from the build and exterior environment. What’s interesting now is that we’re sort of fully recovered from the economic slump of a few years ago. However, two or three years ago the big projects were being considered, because at that time the construction prices were quite low. Now construction prices are catching up at least in Dubai as we’re racing towards Expo 2020, so I think there’s a bit of a fall-out in terms of what may have looked good two or three years ago from a construction point of view is now looking a little more cautious.
“The other part of forecasting is looking for future deadlines: the immediate deadline in Dubai would be 2020 Expo, so if you work back from that you’re probably two years in construction, so we’re now within probably the last year of design before you really have to be out on site breaking ground before you reach the 2020 deadline.”
Laurent Haddad, Design Manager, RW Armstrong“We don’t forecast in terms of statistics. We do what we call the aftersales. The aftersales in interior design are to be more service oriented. We look back to our customers; they might want to downsize, change their hierarchy, fit more people in their spaces. Based on that we can come up with ideas with our repeat clients to discuss how they can adapt to a new market. The good thing about interior design is that it goes inversely proportional to architecture. By the time people stop building new buildings, they look to move into ready spaces. But there’s never a ready space, so the customisation and bespoke design will always be needed. Someone will always need an office, to downsize or upgrade. If you look at the market from that size, you will never be out of work. If you look from the other side – I’ll always only do Grade A projects or five star hotels – then you will suffer. They key point is to adapt to new market requirements.”
OFIS representative“Towards the end of the financial year we look at projects we have in hand and what we have coming along. We do the research on what construction is going on in the UAE and try and correlate to when it’s actually going to be delivered. The majority of projects in the region are delayed, so when forecasting you have to have that little bit of buffer zone in terms of when and how it’s going to be delivered and have contingency plans for those delays. Any delays come back and reflect on us if we have not forecasted well to shareholders and the likes. It’s clear and critical to me that our information needs to be accurate and we need to make adjustments along the way. If we don’t have people when we need them or have too many people then that can financially kill a project.
“There is a lot of data available to let us predict what will be available in terms of space [for clients in over the next year]. Yes, there will be a lot available, but who is going to move into that space? Will people move to the less popular areas from the likes of DIFC and Business Bay? It’s about trying to get into that understanding of who is moving where. How do we do that? Ultimately it’s ears to the ground, talking to the real estate, and trying to get that understanding of what their clients are wanting and planning on doing, being more consultative than purely going round notice boards and finding who was moving where.”