Calculating fees: architectural practice - Revision history

Designing Buildings at 07:15, 3 December 2020

2020-12-03T07:15:05Z

← Older revision		Revision as of 07:15, 3 December 2020
Line 56:		Line 56:
	* Search fees.		* Search fees.

−	[[Category:Appointments]] [[Category:Cost_/_business_planning]]	+	[[Category:DCN_Guidance]] [[Category:Appointments]] [[Category:Cost_/_business_planning]]

Designing Buildings at 15:15, 2 November 2018

2018-11-02T15:15:41Z

← Older revision		Revision as of 15:15, 2 November 2018
Line 1:		Line 1:
−	Project and Practice Specific Fee Calculation – Impact on time and resource:	+	Project and Practice Specific Fee Calculation – Impact on time and resource: To be conscious of the main risks and determine the fee to offset them.
−		+
−	* To be conscious of the main risks and determine the fee to offset them.	+
−	* Always check RIBA benchmark report for inter-firm comparison	+

	= Scenario: New client =		= Scenario: New client =
Line 8:		Line 5:
	The client is new to the practice and should be investigated and credit checked before undertaking any work. This checks the financial status of the client, that they are capable of paying the fees and how regularly and rapidly. This helps to mitigate the risk of unpaid fees later in the project, helping to maintain a regular cash flow.		The client is new to the practice and should be investigated and credit checked before undertaking any work. This checks the financial status of the client, that they are capable of paying the fees and how regularly and rapidly. This helps to mitigate the risk of unpaid fees later in the project, helping to maintain a regular cash flow.

−	If a repeat client, are they good at settling invoices on time? If they are likely to pay late the fee forecast should be updated to schedule when the invoice will be settled. Any negative cash flow highlighted may indicate the practice does not have sufficient levels of work to cope with the late payment of fees and should withdraw from the project.	+	If they are a repeat client, are they good at settling invoices on time? If they are likely to pay late the fee forecast should be updated to schedule when the invoice will be settled. Any negative cash flow highlighted may indicate the practice does not have sufficient levels of work to cope with the late payment of fees and should withdraw from the project.

−	~~ARB code Standard 1 - seek~~ written confirmation if any architects have previously been involved with the project and find out why things may have broken down. This can highlight any warning signs of non payment and to clear any conflicts of interest.	+	Seek written confirmation if any architects have previously been involved with the project and find out why things may have broken down. This can highlight any warning signs of non payment and clear any conflicts of interest.

	= Scenario: Different sector =		= Scenario: Different sector =

−	Assess the project against past projects; is it similar (charge expertise premium) or different (risk, charge reduced fee, additional resources, check practice can financially support).	+	Assess the project against past projects; is it similar (charge expertise premium) or different (risk, charge reduced fee, additional resources, check the practice can financially support).

	If the project is one that the practice is familiar with they can charge a premium due to expertise regarding the benefit of added value. Compare the proposed fee against previous similar jobs to check a sensible outcome has been reached.		If the project is one that the practice is familiar with they can charge a premium due to expertise regarding the benefit of added value. Compare the proposed fee against previous similar jobs to check a sensible outcome has been reached.

−	If the project is one the practice is unfamiliar with/ attempting to undertake new work they should offer a discounted fee due to lack of experience~~/ competitive price~~ to get into a new market. The financial management representative should assess whether the practice will be able to cope with such a low fee as more time and resources are likely to be required to get up to speed with the new ~~design~~ sector and may require ~~specialists~~ input. Monthly flash reports are recommended to regularly monitor profit/ loss and identify whether the practice is likely to experience problems. You may need additional staff which will need to be input ~~in fee~~	+	If the project is one the practice is unfamiliar with or attempting to undertake new work, they should offer a discounted fee due to lack of experience to get into a new market. The financial management representative should assess whether the practice will be able to cope with such a low fee as more time and resources are likely to be required to get up to speed with the new sector and may require specialist input. Monthly flash reports are recommended to regularly monitor profit/ loss and identify whether the practice is likely to experience problems. You may need additional staff which will need to be input into the fee.
−		+
−	~~ARB code Standard 3 - promote your services honestly and responsibly. Make it clear about the level of experience the practice has.~~	+
−		+
−	~~ARB code Standard 4 - required to provide adequate financial resources when entering~~ into ~~a contract for~~ the ~~whole duration~~.	+

	= Scenario: Under-resource =		= Scenario: Under-resource =

−	If the project is a major, large-scale development then additional staff are likely to be required especially in the later RIBA work stages. The calculated fee will need to take this into account. Predict the number of hours to be spent at each RIBA work stage along with overheads. For a new project type ~~in this case~~, unknown timescales and resource costs may be difficult to predict and a time charge fee ~~should~~ be negotiated otherwise the practice may fall into a negative cash flow.	+	If the project is a major, large-scale development then additional staff are likely to be required especially in the later RIBA work stages. The calculated fee will need to take this into account. Predict the number of hours to be spent at each RIBA work stage along with overheads. For a new project type, unknown timescales and resource costs may be difficult to predict and a time charge fee may be negotiated otherwise the practice may fall into a negative cash flow.

	The procurement route should be considered and a project programme outlined for client approval in order to plan resources across the RIBA work stages.		The procurement route should be considered and a project programme outlined for client approval in order to plan resources across the RIBA work stages.
−
−	~~ARB code Standard 2 - Work you undertake should be competent and adequately supervised.~~
−
−	~~ARB code Standard 3 - All work needs to be under the control and management of one or more architects.~~

	= Scenario: EU law/new jurisdiction/conservation =		= Scenario: EU law/new jurisdiction/conservation =

	The project is likely to require specialist consultant advice who have expertise in these sectors. The practice will pay additional costs which will need to be considered as part of the inflow/outflow analysis to monitor the cash flow of the practice. Any negative cash flow will highlight that the practice does not have sufficient working capital to undertake the project.		The project is likely to require specialist consultant advice who have expertise in these sectors. The practice will pay additional costs which will need to be considered as part of the inflow/outflow analysis to monitor the cash flow of the practice. Any negative cash flow will highlight that the practice does not have sufficient working capital to undertake the project.
−
−	~~ARB code Standard 11 - co-operate with regulatory requirements and investigations.~~

	However, this can be difficult to negotiate with the client as there is no guaranteed maximum price. Tight monitoring of the project costs will be necessary if any other method is taken. The practice should be prepared to withdraw from the project if a negative cash flow can be predicted.		However, this can be difficult to negotiate with the client as there is no guaranteed maximum price. Tight monitoring of the project costs will be necessary if any other method is taken. The practice should be prepared to withdraw from the project if a negative cash flow can be predicted.
Line 45:		Line 32:

	The project is in a different country which will involve high travel costs. These should be considered in the fee calculation with an estimated number of visits (i.e. monthly). If these additional costs are not accounted for then the profitability, of a competitive fee in this case, will likely result in a loss.		The project is in a different country which will involve high travel costs. These should be considered in the fee calculation with an estimated number of visits (i.e. monthly). If these additional costs are not accounted for then the profitability, of a competitive fee in this case, will likely result in a loss.
−
−	~~ARB code Standard 6 - required to carry out the agreed services for the agreed costs so important to get this right from the beginning.~~

	= Benchmarking =		= Benchmarking =

−	The project should also be assessed against ~~RIBA business benchmarking~~ for inter-firm comparison. This can highlight how competitive the fee calculation may be and how other practices are dealing with this sector of work.	+	The project should also be assessed against benchmarks for inter-firm comparison. This can highlight how competitive the fee calculation may be and how other practices are dealing with this sector of work.

	= Professional indemnity insurance =		= Professional indemnity insurance =

−	~~The~~ project involves a change in scale to the normal workload the practice undertakes ~~and their~~ PI insurers should be notified. The level of cover is likely to need increasing. The practice should consider the impact of this additional cost to the cash flow forecast. The practice should negotiate a front loaded fee schedule with the client across the early RIBA work stages in order to lighten the load and mitigate this risk.	+	If the project involves a change in scale to the normal workload the practice undertakes, PI insurers should be notified. The level of cover is likely to need increasing. The practice should consider the impact of this additional cost to the cash flow forecast. The practice should negotiate a front loaded fee schedule with the client across the early RIBA work stages in order to lighten the load and mitigate this risk.
−		+
−	~~ARB code Standard 8 - Required to be able to meet a claim. Personal assets may be at risk if the right level of cover is not taken out~~.	+

	= Profit =		= Profit =

	The practice should gather an estimated project cost including resource time, VAT, PAYE & NI, Office rent, PII, supplier payments, corporation tax, expenses and overheads in order to calculate a target profit cost. Monitor performance against expectations in order to keep track of the level of profit likely to be made on the project.		The practice should gather an estimated project cost including resource time, VAT, PAYE & NI, Office rent, PII, supplier payments, corporation tax, expenses and overheads in order to calculate a target profit cost. Monitor performance against expectations in order to keep track of the level of profit likely to be made on the project.
−
−	~~ARB code Standard 4 - competent management requires project monitoring and reviews.~~

	= Related articles on Designing Buildings Wiki =		= Related articles on Designing Buildings Wiki =

Editor at 14:56, 25 October 2018

2018-10-25T14:56:27Z

← Older revision		Revision as of 14:56, 25 October 2018
Line 72:		Line 72:
	* Planning fees.		* Planning fees.
	* Quantity surveyor’s fees.		* Quantity surveyor’s fees.
		+	* Risks in fees and appointments.
	* Search fees.		* Search fees.

	[[Category:Appointments]] [[Category:Cost_/_business_planning]]		[[Category:Appointments]] [[Category:Cost_/_business_planning]]

Editor at 14:48, 25 October 2018

2018-10-25T14:48:29Z

← Older revision		Revision as of 14:48, 25 October 2018
Line 1:		Line 1:
−	Project and Practice Specific Fee Calculation – Impact on time and resource	+	Project and Practice Specific Fee Calculation – Impact on time and resource:

−	~~- to~~ be conscious of the main risks and determine the fee to offset them	+	* To be conscious of the main risks and determine the fee to offset them.
		+	* Always check RIBA benchmark report for inter-firm comparison

−	~~- always check RIBA benchmark report for interfirm comparison~~	+	= Scenario: New client =

−	~~-----~~	+	The client is new to the practice and should be investigated and credit checked before undertaking any work. This checks the financial status of the client, that they are capable of paying the fees and how regularly and rapidly. This helps to mitigate the risk of unpaid fees later in the project, helping to maintain a regular cash flow.
−	* SCENARIO: NEW CLIENT	+

−	-The client is new to the practice and should be investigated and credit checked before undertaking any work. This checks the financial status of the client, that they are capable of paying the fees and how regularly and rapidly. This helps to mitigate the risk of unpaid fees later in the project, helping to maintain a ~~regular cashflow.~~	+	If a repeat client, are they good at settling invoices on time? If they are likely to pay late the fee forecast should be updated to schedule when the invoice will be settled. Any negative cash flow highlighted may indicate the practice does not have sufficient levels of work to cope with the late payment of fees and should withdraw from the project.
−		+
−	~~-If~~ repeat client, are they good at settling invoices on time? If they are likely to pay late the fee forecast should be updated to schedule when the invoice will be settled. Any negative ~~cashflow~~ highlighted may indicate the practice does not have sufficient levels of work to cope with the late payment of fees and should withdraw from the project.	+

	ARB code Standard 1 - seek written confirmation if any architects have previously been involved with the project and find out why things may have broken down. This can highlight any warning signs of non payment and to clear any conflicts of interest.		ARB code Standard 1 - seek written confirmation if any architects have previously been involved with the project and find out why things may have broken down. This can highlight any warning signs of non payment and to clear any conflicts of interest.

−	~~-----~~	+	= Scenario: Different sector =
−	* SCENARIO: ~~DIFFERENT SECTOR~~	+

−	Assess the project against past projects; is it similar (charge expertise premium) or different (risk, charge reduced fee, additional resources, check practice can financially support)	+	Assess the project against past projects; is it similar (charge expertise premium) or different (risk, charge reduced fee, additional resources, check practice can financially support).

−	-If the project is one that the practice is familiar with they can charge a premium due to expertise regarding the benefit of added value. Compare the proposed fee against previous similar jobs to check a sensible outcome has been reached.	+	If the project is one that the practice is familiar with they can charge a premium due to expertise regarding the benefit of added value. Compare the proposed fee against previous similar jobs to check a sensible outcome has been reached.

−	- If the project is one the practice is unfamiliar with/ attempting to undertake new work they should offer a discounted fee due to lack of experience/ competitive price to get into a new market. The financial management representative should assess whether the practice will be able to cope with such a low fee as more time and resources are likely to be required to get up to speed with the new design sector and may require specialists input. Monthly flash reports are recommended to regularly monitor profit/ loss and identify whether the practice is likely to experience problems. You may need additional staff which will need to be input in fee	+	If the project is one the practice is unfamiliar with/ attempting to undertake new work they should offer a discounted fee due to lack of experience/ competitive price to get into a new market. The financial management representative should assess whether the practice will be able to cope with such a low fee as more time and resources are likely to be required to get up to speed with the new design sector and may require specialists input. Monthly flash reports are recommended to regularly monitor profit/ loss and identify whether the practice is likely to experience problems. You may need additional staff which will need to be input in fee

	ARB code Standard 3 - promote your services honestly and responsibly. Make it clear about the level of experience the practice has.		ARB code Standard 3 - promote your services honestly and responsibly. Make it clear about the level of experience the practice has.
Line 27:		Line 24:
	ARB code Standard 4 - required to provide adequate financial resources when entering into a contract for the whole duration.		ARB code Standard 4 - required to provide adequate financial resources when entering into a contract for the whole duration.

−	-~~----~~	+	= Scenario: Under-resource =
−	* SCENARIO: UNDER RESOURCED	+

−	- If the project is a major, large-scale development then additional staff are likely to be required especially in the later RIBA work stages. The calculated fee will need to take this into account. Predict the number of hours to be spent at each RIBA work stage along with overheads. For a new project type in this case, unknown timescales and resource costs may be difficult to predict and a time charge fee should be negotiated otherwise the practice may fall into a negative ~~cashflow~~.	+	If the project is a major, large-scale development then additional staff are likely to be required especially in the later RIBA work stages. The calculated fee will need to take this into account. Predict the number of hours to be spent at each RIBA work stage along with overheads. For a new project type in this case, unknown timescales and resource costs may be difficult to predict and a time charge fee should be negotiated otherwise the practice may fall into a negative cash flow.

−	-The procurement route should be considered and a project programme outlined for client approval in order to plan resources across the RIBA work stages.	+	The procurement route should be considered and a project programme outlined for client approval in order to plan resources across the RIBA work stages.

	ARB code Standard 2 - Work you undertake should be competent and adequately supervised.		ARB code Standard 2 - Work you undertake should be competent and adequately supervised.
Line 38:		Line 34:
	ARB code Standard 3 - All work needs to be under the control and management of one or more architects.		ARB code Standard 3 - All work needs to be under the control and management of one or more architects.

−	~~-----~~	+	= Scenario: EU law/new jurisdiction/conservation =
−	* SCENARIO: EU ~~LAW~~/ ~~NEW JURISDICTION~~/ ~~CONSERVATION~~	+

−	- The project is likely to require specialist consultant advice who have expertise in these sectors. The practice will pay additional costs which will need to be considered as part of the inflow/outflow analysis to monitor the ~~cashflow~~ of the practice. Any negative ~~cashflow~~ will highlight that the practice does not have sufficient working capital to undertake the project.	+	The project is likely to require specialist consultant advice who have expertise in these sectors. The practice will pay additional costs which will need to be considered as part of the inflow/outflow analysis to monitor the cash flow of the practice. Any negative cash flow will highlight that the practice does not have sufficient working capital to undertake the project.

	ARB code Standard 11 - co-operate with regulatory requirements and investigations.		ARB code Standard 11 - co-operate with regulatory requirements and investigations.

−	However, this can be difficult to negotiate with the client as there is no guaranteed maximum price. Tight monitoring of the project costs will be necessary if any other method is taken. The practice should be prepared to withdraw from the project if a negative ~~cashflow~~ can be predicted.	+	However, this can be difficult to negotiate with the client as there is no guaranteed maximum price. Tight monitoring of the project costs will be necessary if any other method is taken. The practice should be prepared to withdraw from the project if a negative cash flow can be predicted.

−	~~-----~~	+	= Scenario: Travel costs/expenses =
−	* SCENARIO: ~~TRAVEL COSTS~~/ ~~EXPENSES~~	+

−	- The project is in a different country which will involve high travel costs. These should be considered in the fee calculation with an estimated number of visits (i.e. monthly). If these additional costs are not accounted for then the profitability, of a competitive fee in this case, will likely result in a loss.	+	The project is in a different country which will involve high travel costs. These should be considered in the fee calculation with an estimated number of visits (i.e. monthly). If these additional costs are not accounted for then the profitability, of a competitive fee in this case, will likely result in a loss.

−	ARB code Standard 6 - required to carry out the agreed services for the agreed costs so important to get this right from the beginning	+	ARB code Standard 6 - required to carry out the agreed services for the agreed costs so important to get this right from the beginning.

−	~~-----~~	+	= Benchmarking =
−	* BENCHMARKING	+

−	-The project should also be assessed against RIBA business benchmarking for inter-firm comparison. This can highlight how competitive the fee calculation may be and how other practices are dealing with this sector of work.	+	The project should also be assessed against RIBA business benchmarking for inter-firm comparison. This can highlight how competitive the fee calculation may be and how other practices are dealing with this sector of work.

−	~~-----~~	+	= Professional indemnity insurance =
−	* PROFESSIONAL INDEMNITY INSURANCE	+

−	-The project involves a change in scale to the normal workload the practice undertakes and their PI insurers should be notified. The level of cover is likely to need increasing. The practice should consider the impact of this additional cost to the ~~cashflow~~ forecast. The practice should negotiate a front loaded fee schedule with the client across the early RIBA work stages in order to lighten the load and mitigate this risk.	+	The project involves a change in scale to the normal workload the practice undertakes and their PI insurers should be notified. The level of cover is likely to need increasing. The practice should consider the impact of this additional cost to the cash flow forecast. The practice should negotiate a front loaded fee schedule with the client across the early RIBA work stages in order to lighten the load and mitigate this risk.

	ARB code Standard 8 - Required to be able to meet a claim. Personal assets may be at risk if the right level of cover is not taken out.		ARB code Standard 8 - Required to be able to meet a claim. Personal assets may be at risk if the right level of cover is not taken out.

−	~~-----~~	+	= Profit =
−	* PROFIT	+

−	-The practice should gather an estimated project cost including resource time, VAT, PAYE & NI, Office rent, PII, supplier payments, corporation tax, expenses and overheads in order to calculate a target profit cost. Monitor performance against expectations in order to keep track of the level of profit likely to be made on the project.	+	The practice should gather an estimated project cost including resource time, VAT, PAYE & NI, Office rent, PII, supplier payments, corporation tax, expenses and overheads in order to calculate a target profit cost. Monitor performance against expectations in order to keep track of the level of profit likely to be made on the project.

	ARB code Standard 4 - competent management requires project monitoring and reviews.		ARB code Standard 4 - competent management requires project monitoring and reviews.
		+
		+	= Related articles on Designing Buildings Wiki =
		+
		+	* Architects fees.
		+	* Charge-out rate.
		+	* Disbursement.
		+	* Fees.
		+	* Planning fees.
		+	* Quantity surveyor’s fees.
		+	* Search fees.
		+
		+	[[Category:Appointments]] [[Category:Cost_/_business_planning]]

Editor: moved Calculating Fee's: Architectural Practice to Calculating fees: architectural practice

2018-10-25T14:42:51Z

moved Calculating Fee's: Architectural Practice to Calculating fees: architectural practice

← Older revision

Revision as of 14:42, 25 October 2018

0325 at 22:17, 7 May 2018

2018-05-07T22:17:19Z

← Older revision		Revision as of 22:17, 7 May 2018
Line 1:		Line 1:
−	~~A).~~ Project and Practice Specific Fee Calculation – Impact on time and resource	+	Project and Practice Specific Fee Calculation – Impact on time and resource

	- to be conscious of the main risks and determine the fee to offset them		- to be conscious of the main risks and determine the fee to offset them

0325 at 22:16, 7 May 2018

2018-05-07T22:16:49Z

← Older revision		Revision as of 22:16, 7 May 2018
Line 5:		Line 5:
	- always check RIBA benchmark report for interfirm comparison		- always check RIBA benchmark report for interfirm comparison

−	~~1).~~ SCENARIO: NEW CLIENT	+	-----
		+	* SCENARIO: NEW CLIENT

	-The client is new to the practice and should be investigated and credit checked before undertaking any work. This checks the financial status of the client, that they are capable of paying the fees and how regularly and rapidly. This helps to mitigate the risk of unpaid fees later in the project, helping to maintain a regular cashflow.		-The client is new to the practice and should be investigated and credit checked before undertaking any work. This checks the financial status of the client, that they are capable of paying the fees and how regularly and rapidly. This helps to mitigate the risk of unpaid fees later in the project, helping to maintain a regular cashflow.
Line 13:		Line 14:
	ARB code Standard 1 - seek written confirmation if any architects have previously been involved with the project and find out why things may have broken down. This can highlight any warning signs of non payment and to clear any conflicts of interest.		ARB code Standard 1 - seek written confirmation if any architects have previously been involved with the project and find out why things may have broken down. This can highlight any warning signs of non payment and to clear any conflicts of interest.

−	~~2).~~ SCENARIO: DIFFERENT SECTOR	+	-----
		+	* SCENARIO: DIFFERENT SECTOR

	Assess the project against past projects; is it similar (charge expertise premium) or different (risk, charge reduced fee, additional resources, check practice can financially support)		Assess the project against past projects; is it similar (charge expertise premium) or different (risk, charge reduced fee, additional resources, check practice can financially support)
Line 25:		Line 27:
	ARB code Standard 4 - required to provide adequate financial resources when entering into a contract for the whole duration.		ARB code Standard 4 - required to provide adequate financial resources when entering into a contract for the whole duration.

−	~~3).~~ SCENARIO: UNDER RESOURCED	+	-----
		+	* SCENARIO: UNDER RESOURCED

	- If the project is a major, large-scale development then additional staff are likely to be required especially in the later RIBA work stages. The calculated fee will need to take this into account. Predict the number of hours to be spent at each RIBA work stage along with overheads. For a new project type in this case, unknown timescales and resource costs may be difficult to predict and a time charge fee should be negotiated otherwise the practice may fall into a negative cashflow.		- If the project is a major, large-scale development then additional staff are likely to be required especially in the later RIBA work stages. The calculated fee will need to take this into account. Predict the number of hours to be spent at each RIBA work stage along with overheads. For a new project type in this case, unknown timescales and resource costs may be difficult to predict and a time charge fee should be negotiated otherwise the practice may fall into a negative cashflow.
Line 35:		Line 38:
	ARB code Standard 3 - All work needs to be under the control and management of one or more architects.		ARB code Standard 3 - All work needs to be under the control and management of one or more architects.

−	~~4).~~ SCENARIO: EU LAW/ NEW JURISDICTION/ CONSERVATION	+	-----
		+	* SCENARIO: EU LAW/ NEW JURISDICTION/ CONSERVATION

	- The project is likely to require specialist consultant advice who have expertise in these sectors. The practice will pay additional costs which will need to be considered as part of the inflow/outflow analysis to monitor the cashflow of the practice. Any negative cashflow will highlight that the practice does not have sufficient working capital to undertake the project.		- The project is likely to require specialist consultant advice who have expertise in these sectors. The practice will pay additional costs which will need to be considered as part of the inflow/outflow analysis to monitor the cashflow of the practice. Any negative cashflow will highlight that the practice does not have sufficient working capital to undertake the project.
Line 43:		Line 47:
	However, this can be difficult to negotiate with the client as there is no guaranteed maximum price. Tight monitoring of the project costs will be necessary if any other method is taken. The practice should be prepared to withdraw from the project if a negative cashflow can be predicted.		However, this can be difficult to negotiate with the client as there is no guaranteed maximum price. Tight monitoring of the project costs will be necessary if any other method is taken. The practice should be prepared to withdraw from the project if a negative cashflow can be predicted.

−	~~5).~~ SCENARIO: TRAVEL COSTS/ EXPENSES	+	-----
		+	* SCENARIO: TRAVEL COSTS/ EXPENSES

	- The project is in a different country which will involve high travel costs. These should be considered in the fee calculation with an estimated number of visits (i.e. monthly). If these additional costs are not accounted for then the profitability, of a competitive fee in this case, will likely result in a loss.		- The project is in a different country which will involve high travel costs. These should be considered in the fee calculation with an estimated number of visits (i.e. monthly). If these additional costs are not accounted for then the profitability, of a competitive fee in this case, will likely result in a loss.
Line 49:		Line 54:
	ARB code Standard 6 - required to carry out the agreed services for the agreed costs so important to get this right from the beginning		ARB code Standard 6 - required to carry out the agreed services for the agreed costs so important to get this right from the beginning

−	~~6).~~ BENCHMARKING	+	-----
		+	* BENCHMARKING

	-The project should also be assessed against RIBA business benchmarking for inter-firm comparison. This can highlight how competitive the fee calculation may be and how other practices are dealing with this sector of work.		-The project should also be assessed against RIBA business benchmarking for inter-firm comparison. This can highlight how competitive the fee calculation may be and how other practices are dealing with this sector of work.

−	~~7).~~ PROFESSIONAL INDEMNITY INSURANCE	+	-----
		+	* PROFESSIONAL INDEMNITY INSURANCE

	-The project involves a change in scale to the normal workload the practice undertakes and their PI insurers should be notified. The level of cover is likely to need increasing. The practice should consider the impact of this additional cost to the cashflow forecast. The practice should negotiate a front loaded fee schedule with the client across the early RIBA work stages in order to lighten the load and mitigate this risk.		-The project involves a change in scale to the normal workload the practice undertakes and their PI insurers should be notified. The level of cover is likely to need increasing. The practice should consider the impact of this additional cost to the cashflow forecast. The practice should negotiate a front loaded fee schedule with the client across the early RIBA work stages in order to lighten the load and mitigate this risk.
Line 59:		Line 66:
	ARB code Standard 8 - Required to be able to meet a claim. Personal assets may be at risk if the right level of cover is not taken out.		ARB code Standard 8 - Required to be able to meet a claim. Personal assets may be at risk if the right level of cover is not taken out.

−	~~8).~~ PROFIT	+	-----
		+	* PROFIT

	-The practice should gather an estimated project cost including resource time, VAT, PAYE & NI, Office rent, PII, supplier payments, corporation tax, expenses and overheads in order to calculate a target profit cost. Monitor performance against expectations in order to keep track of the level of profit likely to be made on the project.		-The practice should gather an estimated project cost including resource time, VAT, PAYE & NI, Office rent, PII, supplier payments, corporation tax, expenses and overheads in order to calculate a target profit cost. Monitor performance against expectations in order to keep track of the level of profit likely to be made on the project.

	ARB code Standard 4 - competent management requires project monitoring and reviews.		ARB code Standard 4 - competent management requires project monitoring and reviews.

0325: Created page with "A). Project and Practice Specific Fee Calculation – Impact on time and resource - to be conscious of the main risks and determine the fee to offset them - always check RIBA b..."

2018-05-07T21:50:46Z

Created page with "A). Project and Practice Specific Fee Calculation – Impact on time and resource - to be conscious of the main risks and determine the fee to offset them - always check RIBA b..."

New page

A). Project and Practice Specific Fee Calculation – Impact on time and resource

- to be conscious of the main risks and determine the fee to offset them

- always check RIBA benchmark report for interfirm comparison

1). SCENARIO: NEW CLIENT

-The client is new to the practice and should be investigated and credit checked before undertaking any work. This checks the financial status of the client, that they are capable of paying the fees and how regularly and rapidly. This helps to mitigate the risk of unpaid fees later in the project, helping to maintain a regular cashflow.

-If repeat client, are they good at settling invoices on time? If they are likely to pay late the fee forecast should be updated to schedule when the invoice will be settled. Any negative cashflow highlighted may indicate the practice does not have sufficient levels of work to cope with the late payment of fees and should withdraw from the project.

ARB code Standard 1 - seek written confirmation if any architects have previously been involved with the project and find out why things may have broken down. This can highlight any warning signs of non payment and to clear any conflicts of interest.

2). SCENARIO: DIFFERENT SECTOR

Assess the project against past projects; is it similar (charge expertise premium) or different (risk, charge reduced fee, additional resources, check practice can financially support)

-If the project is one that the practice is familiar with they can charge a premium due to expertise regarding the benefit of added value. Compare the proposed fee against previous similar jobs to check a sensible outcome has been reached.

- If the project is one the practice is unfamiliar with/ attempting to undertake new work they should offer a discounted fee due to lack of experience/ competitive price to get into a new market. The financial management representative should assess whether the practice will be able to cope with such a low fee as more time and resources are likely to be required to get up to speed with the new design sector and may require specialists input. Monthly flash reports are recommended to regularly monitor profit/ loss and identify whether the practice is likely to experience problems. You may need additional staff which will need to be input in fee

ARB code Standard 3 - promote your services honestly and responsibly. Make it clear about the level of experience the practice has.

ARB code Standard 4 - required to provide adequate financial resources when entering into a contract for the whole duration.

3). SCENARIO: UNDER RESOURCED

- If the project is a major, large-scale development then additional staff are likely to be required especially in the later RIBA work stages. The calculated fee will need to take this into account. Predict the number of hours to be spent at each RIBA work stage along with overheads. For a new project type in this case, unknown timescales and resource costs may be difficult to predict and a time charge fee should be negotiated otherwise the practice may fall into a negative cashflow.

-The procurement route should be considered and a project programme outlined for client approval in order to plan resources across the RIBA work stages.

ARB code Standard 2 - Work you undertake should be competent and adequately supervised.

ARB code Standard 3 - All work needs to be under the control and management of one or more architects.

4). SCENARIO: EU LAW/ NEW JURISDICTION/ CONSERVATION

- The project is likely to require specialist consultant advice who have expertise in these sectors. The practice will pay additional costs which will need to be considered as part of the inflow/outflow analysis to monitor the cashflow of the practice. Any negative cashflow will highlight that the practice does not have sufficient working capital to undertake the project.

ARB code Standard 11 - co-operate with regulatory requirements and investigations.

However, this can be difficult to negotiate with the client as there is no guaranteed maximum price. Tight monitoring of the project costs will be necessary if any other method is taken. The practice should be prepared to withdraw from the project if a negative cashflow can be predicted.

5). SCENARIO: TRAVEL COSTS/ EXPENSES

- The project is in a different country which will involve high travel costs. These should be considered in the fee calculation with an estimated number of visits (i.e. monthly). If these additional costs are not accounted for then the profitability, of a competitive fee in this case, will likely result in a loss.

ARB code Standard 6 - required to carry out the agreed services for the agreed costs so important to get this right from the beginning

6). BENCHMARKING

-The project should also be assessed against RIBA business benchmarking for inter-firm comparison. This can highlight how competitive the fee calculation may be and how other practices are dealing with this sector of work.

7). PROFESSIONAL INDEMNITY INSURANCE

-The project involves a change in scale to the normal workload the practice undertakes and their PI insurers should be notified. The level of cover is likely to need increasing. The practice should consider the impact of this additional cost to the cashflow forecast. The practice should negotiate a front loaded fee schedule with the client across the early RIBA work stages in order to lighten the load and mitigate this risk.

ARB code Standard 8 - Required to be able to meet a claim. Personal assets may be at risk if the right level of cover is not taken out.

8). PROFIT

-The practice should gather an estimated project cost including resource time, VAT, PAYE & NI, Office rent, PII, supplier payments, corporation tax, expenses and overheads in order to calculate a target profit cost. Monitor performance against expectations in order to keep track of the level of profit likely to be made on the project.

ARB code Standard 4 - competent management requires project monitoring and reviews.