Getting the Blueprint Right: When an Architecture and Engineering Firm Join Forces

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Multi-disciplinary professional corporations are becoming more common in many sectors as clients expect more for less while global competition intensifies.

More than one CEO of either an architecture or engineering firm has lamented that, “We’re too big to be little, and we’re too little to be big.” [1]

Architecture and engineering firms that once operated in virtual silos are doing much more than collaborating on large projects. They are joining forces and reinventing their brands. It’s a case of growing sales and raising margins to extend their professional lifespan or risk being swallowed up by larger competitors with deeper pockets – or, close the doors.

This business opportunity can be embraced with a more flexible framework for professional corporations in Ontario. A professional corporation is typically incorporated in anticipation of providing services involving a single discipline, such as law or accounting. It rarely involves two distinct disciplines, such as architecture and engineering, joining forces.

However, it’s become increasingly common to see a multi-disciplinary firm offering both architectural and engineering services in Ontario. In fact, both the Architects Act (the “AA”) and the Professional Engineers Act (the “PEA”), anticipate this combination of services, and set out identical rules for the regulation of the relationship between architects and engineers within the same corporation.

A key requirement is that the corporation has a designated licensed member of each profession to supervise the provision of services under their respective disciplines. Only then can the corporation become authorized, independently under each act, to provide architectural and engineering services.

Owners must also take care when naming the new entity. For example, the AA has restrictions regarding the use of the word “architect”. A corporation’s name may only include the word “architect” or “architecte” or a derivative or abbreviation of either word, if it has a valid certificate of practice. (The PEA contains no such restriction.)

In addition, the AA and PEA require the following:

1) The corporation must obtain a “certificate of practice” to provide architectural services under the AA.  To receive a certificate, the organization of the corporation must meet these requirements:

  • A majority of the directors are members of the Ontario Association of Architects, or members of the Ontario Association of Architects and members of the Association of Professional Engineers of Ontario;
  • At least 51 per cent of the voting shares and of the value of all the shares of the corporation is directly or indirectly controlled and owned by members of the Ontario Association of Architects, or members of the Ontario Association of Architects and members of the Association of Professional Engineers of Ontario;
  • The primary function of the corporation is to engage in the practice of architecture; and
  • At least one of the corporation’s directors or employees is a member of the Association of Architects who will personally supervise the practice of architecture on a full time basis.

2) The corporation must then obtain a “certificate of authorization” under the PEA to provide engineering services.

To qualify, the corporation must entrust at least one licensed engineer to supervise all professional engineering services. In addition, the corporation must also complete the required forms and pay the related fees.

Each act clarifies the services that architects or engineers may provide.  While an owner may know exactly how to manage the two practices from a business perspective, ensuring compliance to the various legal requirements of the acts can be cumbersome.

Therefore, if you are considering incorporating or merging an architecture and engineering firm, confirm with your legal advisors that you are fulfilling all the intersecting requirements of the architecture, engineering and business corporations legislation.

Houser Henry & Syron LLP can help you set the foundation of a successful business while freeing you to do what you do best – profitably deploy the talents and commitment of the architects and engineers you’ve brought together.

[1] Burt Hill’s CEO Pete Moriarty on his board’s decision to sell to Stantec in 2010 from AE Industry News January 10, 2015 The Vanishing Mid-Sized Architecture and Engineering Firm.