The Structure of Design Firms in the Construction Industry

Making use of data collected by the US Census of Business in 1967, the paper examines the market and organizational characteristics of American architectural, engineering, and land surveying firms with four or more employees. Design work, when measured by receipts, is shown to be highly concentrated: the 3% of architectural firms and the 9% of engineering firms with fifty or more employees account for 25% and 55% of the receipts respectively, The government is the single most important source of gross income both for architectural and for engineering firms. The receipts of architectural firms are derived overwhelmingly from nonresidential building projects whereas the kinds of projects from which engineering firms derive their business are much more diverse. Among residential building types, engineering services are more in demand for housing for single families, while architects have a substantial share of the market for design work in multifamily housing. The income received by design firms of all types is only a tiny share of the receipts for the construction industry as a whole. Design firms are heavily dependent on the labor of personnel who are not professional, but rather are technicians and other types of lower-level employees. The division of labor is correlated with the size of firms, with the larger firms employing larger proportions of nonprofessional personnel. At the end of the paper questions are raised whether the curricula of the schools of architecture in the United States acknowledge sufficiently these characteristics of design practice. An appendix discusses changes in some characteristics of design firms between 1967 and 1972.