The Fees Bureau’s annual benchmarking report for RIBA records a result that should unsettle any practice principal: UK architecture practice profits fell from £550m to £528m, even as revenue grew.
The cause is not mysterious. Staff costs rose faster than fee income. The warning that accompanied the figures was blunt — practices need to control costs and plan fees over the longer term.
Why architecture practice profitability matters right now
Growing revenue alongside falling profit is a specific and dangerous pattern. It means the practice is adding work that costs more to deliver than it earns, and the growth is actively making things worse. Busy feels like health, which is why this pattern often runs for two or three years before anyone intervenes.
The mechanism is almost always fee setting disconnected from delivery cost. A fee agreed on last year’s salary assumptions, delivered by a team whose costs have risen, produces a worse result on a nominally identical project — and nobody notices because the fee looks the same.
Architect fee management is therefore a data problem before it is a negotiation problem. A practice that cannot say what a RIBA stage actually cost to deliver last time cannot set a fee for it this time with any confidence.
Key takeaways
- UK architecture practice profits fell from £550m to £528m despite revenue growth.
- Rising staff costs outpaced fee income.
- Revenue growth with falling profit means unprofitable work is being added.
- Fees set without current delivery-cost data erode margin invisibly.
- Longer-term fee planning requires knowing realised cost per stage.
What this means for practice principals and finance directors
For practice principals, the first question is not ‘are we profitable?’ but ‘which work is profitable?’. Aggregate margin hides enormous variation. Most practices have a project type that consistently loses money and a client who consistently costs more to serve than the fee allows.
For finance directors, the task is connecting salary cost to stage delivery. Once you can see realised cost per RIBA stage by project type, fee setting becomes evidence-led rather than competitive guesswork.
For associates and project leads, the operational consequence is earlier intervention. Stage overruns caught in week three are a conversation; caught at final account they are a write-off.
Aggregate margin hides the problem
Nearly every practice has a project type that loses money. Portfolio-level profit conceals it.
Fees need current cost data
A fee based on last year's salary assumptions quietly underprices this year's delivery.
Catch overruns in flight
A stage overrun found in week three is negotiable. Found at final account, it is absorbed.
Costing and fee planning: spreadsheets, point tools or one system?
Most practices know their annual profit well and their per-project profit poorly. The difference is where the opportunity sits.
| Capability | Spreadsheets | Separate point tools | Quantim |
|---|---|---|---|
| Realised cost per stage | Rarely calculated | Time tool only, no fee link | Hours and fee in one model |
| Profitability by project type | Manual analysis | Hard to query | Reportable |
| Fee setting evidence | Precedent and instinct | Partial data | Historic realised cost |
| Live overrun warning | At invoice | Fragmented | In-flight alerts at stage level |
| Client profitability view | Seldom attempted | Not supported | Available across projects |
How Quantim helps
Quantim’s fee management, profitability and project-costing dashboards exist for precisely this problem: connecting what a stage costs to deliver with what it was sold for, by project type and by client.
That connection is what turns fee setting from an annual argument into a quarterly decision backed by the practice’s own evidence.
- Calculate realised cost per RIBA stage on your last twenty completed projects, grouped by project type.
- Rank clients and project types by actual margin rather than by revenue.
- Reset fee benchmarks quarterly using current salary cost and realised delivery data.
See how Quantim shows which projects and clients actually make money, stage by stage.
Request a demoRevenue up and profit down is not a slow year. It is a practice adding work that costs more to deliver than it earns — and growing the problem.
“We found one client type where we had never made money in six years. Nobody had looked at it that way before because the practice as a whole was profitable.”
Managing partner, UK architecture practice
Checklist for practice leaders
- Calculate realised cost per stage on the last twenty completed projects.
- Rank project types by actual margin, not revenue.
- Identify the client relationships that cost more to serve than the fee allows.
- Reset fee benchmarks against current salary costs.
- Set a stage-level variance threshold that triggers an early conversation.
- Review scope creep patterns on the project types that underperform.
Frequently asked questions
Why are UK architecture practice profits falling despite revenue growth?
Because staff costs have risen faster than fee income, so additional work is being delivered at a lower margin than the work it replaced. The Fees Bureau benchmarking report for RIBA recorded profits falling from £550m to £528m against growing revenue. This pattern usually indicates fees set on outdated cost assumptions rather than a demand problem. The warning was reported by BD on the Fees Bureau's findings.
How do you improve profitability in an architecture practice in 2026?
Start by replacing aggregate margin with per-project and per-client margin. Calculate realised cost per RIBA stage across recent completed projects, group by project type, and identify where delivery consistently exceeds fee. Then reset fee benchmarks against current salary costs rather than precedent, and introduce stage-level variance alerts so overruns are caught during delivery rather than at final account.
What is the most common cause of fee erosion in architecture?
Fees set from precedent rather than from current realised delivery cost. A fee that was adequate two years ago becomes inadequate as salaries rise, but because the fee figure looks unchanged, the erosion is invisible. Scope creep compounds it, particularly on project types where the practice has not analysed where additional hours habitually go.
Getting a grip on costs is not about spending less. It is about knowing which work earns its fee and setting prices from evidence rather than precedent. Explore the features and benefits of Quantim to see how fee management and profitability dashboards work together.