The first company to marry architecture and engineering, Albert Kahn Associates is carrying that same strive for innovation into its second century...
By James Buchanan
With more than a century of experience in the combined architectural and engineering industry, Albert Kahn Associates, Inc. (AKA) uses that wealth of experience to drive its continuous cycle of improvement.
It is a cycle that began with the company’s founder and namesake, who was the first to combine the disciplines of architecture and engineering into one firm, which continues to this day. This ability to innovate and adapt has allowed the company to negotiate troubled waters during the late 1990s when their traditional bread basket – the automotive industry – hit lean times.
From the formation of strategic subsidiaries that have allowed the company to offer clients far more than traditional architectural and engineering services, to the opening of branch offices that have helped the firm expand its geographic reach, continuous evolution has enabled AKA to remain a leader in the industry and reliably serve its clients for more than a century.
In the Beginning…
In order to understand how the company is continuing to evolve from one centered on the automotive manufacturing industry to a broader base of markets, it is important to know where and how the company began.
The company was founded in 1895 in Detroit by architect Albert Kahn, whose first innovation was to design plants for the budding automotive industry that shunned the more typical timber-framed designs of the time. Seeing that these plants were inefficient and dangerous, Kahn developed plans for the first concrete reinforced auto factory. Soon after, Henry Ford recognized Kahn’s talents and hired him to design Ford’s Highland Park plant. Albert Kahn and his young company were off and running.
According to Stephen Q. Whitney, president and CEO of AKA, for the first 100 years the company operated along a traditional straight department line. In the mid-1990s, the company made a move to shift its corporate structure from traditional straight department lines into teams that crossed departmental boundaries. The intent was to improve project team coordination and cooperation by collocating team members for a given project.
Unfortunately, different disciplines are not all working on most projects at the same time, so the proximity did not work well, plus the previous mentoring within each discipline was severely compromised. Simply put, the new structure made it difficult to coordinate work assignments and also resulted in junior and senior level architects and engineers spending less time together.
In late 2001, the company responded by launching a company-wide reorganization effort that refocused its organizational structure and simplified its service delivery system, making operations leaner and more efficient. Central to this undertaking, says Whitney, was the decision to return the company to a traditional straight department line organization. This is a bit different from how most other firms are organized, he says, but it works best for AKA as they seek to bridge one generation to the next, retain the best and the brightest in their respective disciplines, and maintain a high level of work on their various projects.
Today AKA’s departments fall into six groups – design, architectural, structural, mechanical engineering, electrical engineering, and project management – a number of which include sub-departments.
AKA’s design group provides a full range of design services including programming, site design, conceptual facility design, space and departmental planning, schematic design, design development, interior design and landscape architecture.
The firm’s architectural group is responsible for the execution of the architectural contract drawings, based on approved architectural design concepts, and for technical coordination of structural, mechanical and electrical design requirements with the architectural work.
The structural engineering department has experience in the design of structural steel, concrete, precast post/pretension concrete, aluminum and composite systems, as well as all types of foundation design. Services include complete soils analysis and geotechnical investigations; establishment of load criteria; the investigation of existing structures; renovation and modification, as well as reinforcing, -as required,- to meet new design load conditions or code requirements; and preparation of bidding documents and specifications.
The firm’s mechanical department designs buildings’ total mechanical systems, with services including plumbing, heating, air conditioning, industrial ventilation, fire protection, process and special services such as tank farms, boiler plant, air compressor plant, central chilled water systems and purified water system design. Special services include noise and vibration control systems acoustical analysis and building management/energy management control.
AKA’s electrical engineers can provide services in all areas of electrical design, including power and control systems for equipment provided under architectural, mechanical and process plans and specifications. Specific services include load analysis, power system design, lighting design, communication system planning and design, building security monitoring and environmental control system design.
Representatives from the firm’s project management group coordinate projects’ programming, planning, design and construction activities within and in support of the project team. AKA’s project managers also synchronize design team activities with the owner, as well as coordinate and monitor the scheduling, budgeting and estimating for all project-related activities. In addition, project managers assist the owner in the preparation and negotiation of contract agreements; coordinate the preparation of studies and reports; secure program and project approvals from local, state and federal agencies; and represent AKA on committees or task forces established for the project.
Overall, says Whitney, each project team is comprised of individuals from each department who reflect the best talent from within our organization to meet the specific needs of each client. The combination of the team’s specialized skills and project experience provides the client with comprehensive design, development and administrative services from the inception of a project through its completion phases.
According to Whitney, the combination of market diversification and operation reorganization initiatives undertaken by the firm has made AKA a stronger and more flexible organization. “We came out of the hard times very strongly and now are a more diversified company,” says Whitney.
Further, this corporate structure is overlaid upon an international geographic structure. The company is based in Detroit, but also has offices in Birmingham, Ala.; Sao Paulo, Brazil; and Juarez, Mexico with a combined total of 250 employees. The Sao Paulo office serves two strategic functions, which are providing architectural and engineering services for projects located in Brazil and assisting the main office with developing technical documents. The latter of these responsibilities offers a cost savings as the work is done at a lower per-hour rate than if it were handled at the home office.
Adapting to Market Changes…
AKA is currently at the latter end of a restructuring project that began in the late 1990s to address changes in its principle market.
In 2000, the company actually employed approximately 400 people, with a focus on serving the automotive industry (75 percent of its annual revenues were derived from automotive and industrial clients). However, as auto industry sales and production began to fall off they were forced to adapt by restructuring the company and refocusing to broaden the industries they work in.
In 2002, gross fees for the company were $35.1 million, which was down from the previous year’s tally of $$40.6 million. In 2003 and 2004 respectively, gross fees were $32.5 million and $30.5 million. By 2005, however, as the company’s refocusing efforts began to take effect and the industry-wide slump in construction spending in the wake of the September 11, 2001 terrorist attacks began to turn around, gross fees grew to $34.9 million. By 2006, the company was back up to $36 million in gross fees for the year.
According to Whitney, broadening the company’s focus means that today 60 percent of the company’s earnings come from clients in the corporate, institutional and health care arenas.
Part of this success has to do with returning to their department-based makeup, but also diversifying the kinds of facilities it builds and the services they provide. Beyond the automotive industry they now serve the health care, higher education, corporate, research and technology, and government markets.
Though the health care industry is where they have seen the most dramatic growth, the company is looking for and seizing opportunities in the banking and insurance industries as well. In particular, says Whitney, the insurance industry has an increased need for remote data centers, which are off-site, bunker-type facilities that house the client’s computer-based systems. The need is to protect vast amounts of data from natural disasters such as tornadoes, hurricanes, and earthquakes. These data centers are being located in regions of the country less prone to these kinds of natural events. AKA believes that being among the first into this relatively new area of design and construction will hold a strong competitive advantage, says Whitney.
The company is also providing infrastructure for the alternative fuels industry, such as companies producing bio-diesel. “This is a great area for engineers with experience in the automotive industry to apply their skills,” says Whitney. Also, because many of these companies are startups, there are great opportunities to build strategic relationships. For example, AKA is teaming up with NextEnergy to build facilities for this emerging market. NextEnergy owns facilities the startups use to initially build and grow their business, says Whitney.
The company’s efforts at refocusing have also led to the development of a host of complementary services for their customers. “Generally, these are not things you would find a typical design firm doing,” says Whitney, “but this allows us to build much stronger partnerships with our clients. Service is what it is all about and we want to be a partner in the lifespan of the facilities we build, which also places us on the front-end for improvements and repeat business.”
For example, Kahn Global Services, Inc., a subsidiary of AKA offers the following:
• Program management – the company will provide resources to oversee design, construction, and equipping of the facilities they build to help the client bring operations online as smoothly as possible, says Whitney. They will also provide technical experts in the equipage of the client to ensure proper maintenance and service once the facility is operating.
• Move management –Kahn Global Services, Inc., will produce an inventory of assets then box, and move the assets to the new location.
Looking forward, Whitney sees clients wanting to move into leasing arrangements rather than outright ownership of facilities in order to be more nimble as they grow. Therefore, Whitney sees the company increasing its efforts to develop relationships with property owners to grow its facility management services. This kind of leasing, says Whitney, is a strong trend in the automotive and health care industries.
Lastly, Whitney says that geographic growth is essential. They work in all 50 states, but realize that many clients are a bit more parochial about the companies they will work with, says Whitney. For example, AKA is looking to grow into the Southeast and Southwest where there is strong population and industrial growth. Whitney says international automotive manufacturers coming to the U.S. tend to seek sites in the Southeast.
With all of this current and planned growth, AKA has unique issues relevant to their supply chain. According to Whitney, historically their industry didn’t really have supply chain concerns. However, as they have expanded its services and the sectors they work in many of their projects turn on developing partnerships and synergies with other players.
It used to be that the architectural firm designed the project and then it would be sent out to contractors to bid and build it. Now they are seeing more of a design/build concept, which means there is a single point responsible for the design and construction. As AKA follows this model more and more they must be able to ensure that a particular contractor has the capabilities to handle the project.
Also, to address special issues such as vertical transportation, fire protection, life safety and food service, consultants are brought in ensure all the elements of a project come together smoothly.
To handle this responsibility AKA will continue to build strong relationships with specialized companies and contractors that have a proven track record.
Corporate Experience as Improvement Tool…
To drive continuous improvement AKA has instituted a number of practices and policies to standardize the technical aspects of what they do while remaining open to varied designs and aesthetics.
At its core, these practices rely on using one of its best assets – the company’s 112 years of industry experience. It is something akin to strategically using their legacy for continuous improvement.
To be more specific, they have created a Lessons Learned database where at the inception of a new project they can go and look at past projects that are directly related to the one they are working on. In this database they will find information on the kinds of challenges and issues that were encountered and how they were mitigated. Project managers can then put those lessons into practice.
They also have created a company-wide checklist that runs from inception to completion, with sub-checklists within each step of the design and build process, which includes:
• During the schematic design phase where the initial vision of the project is developed the company brings in all disciplines to make sure that all of the elements of this creative process will work in practice.
• Next the technical documents are created and final specifications are inserted.
• During the construction phase checklists are created for onsite use to ensure that contractors are following through on the intent of the design and engineering.
• When the project is complete a post mortem is done where all of the issues and suggestions for improvement are noted and added to the database for future use.
The company also relies on the latest three-dimensional CAD modeling commonly known as Building Information Modeling (BIM). Rather than work in a two dimensional world as was done in the past they can create three dimensional plans on the computer.
“We can virtually build the facility in advance,” says Whitney, “find interferences and resolve them before the design goes out to the field. This is a far more efficient process and far more cost effective. Also, if you want to work for the government they require this kind of 3D modeling.”
Finding the Best and the Brightest…
Recruitment and retention are the biggest challenges of the industry as the number of architectural and engineering students drops off and the Baby Boom generation begins to retire. “It is a very competitive aspect of our business to bring in the best and the brightest,” says Whitney.
Competitive salaries are important, but are somewhat less important to the goal of helping employees achieve their professional goals throughout their career while remaining at AKA, says Whitney. Therefore, the company supports continuing education and additional degrees for their employees by offering financial support on a sliding scale based on class performance. AKA also provides technical training to their employees in areas such as advanced computer design and 3D CAD modeling.
AKA also makes a concerted effort to resolve generational differences between their employees. For example, the Baby Boomers believe, says Whitney, work should be done within the confines of the office during normal work hours. Meanwhile the younger employees respond that work can get done in the office or remotely.
To resolve this conflict in a way that was sensitive to both sides the company held a series of generational forums. Out of these grew a policy that allows employees to work remotely with the permission of their supervisor. However, they must show they can work effectively, and also must be in the office for weekly team meetings. “No one person is an island unto themselves, they must be able to work within their team,” says Whitney.
As to recruiting new employees, the company has formed partnerships with three of the Detroit area’s colleges. These initiatives include a competitive fellowship, promoting an architectural curriculum for budding architects that want to specialize in medical facilities, and offering senior employees to teach various courses. At one college they are also working to develop a joint engineering/architecture curriculum. The company also provides a number of internships.