Fee consideration for architects

This article needs more work. To help develop this article, click 'Edit this article' above.

See also Architect's Fees.

Introduction

The RIBA are moving towards resource based fee calculation - promoting the RIBA fee calculator as a tool with outputs that can be used to explain fee calculation to clients.

The RIBA Practice committee highly recommends architects spend whatever time they need to carefully asses, formulate and present the details of the fee required for any job. The fee can then be explained and agreed with the client to form a basis of a transparent and successful relationship. Spending an adequate time on fee calculation will ensure an appropriate charge for architect’s services.

To establish the extent of services so that client has a clear understanding of the role and service the architect is about to engage, it is crucial that an appointment document is completed and signed by both parties. This will make clear, in writing what services will be provided and the conditions of engagement.

Once a clear scope and deliverables are set, it is possible to begin to asses the time involved in carrying out the works and start to asses corresponding fees that relate to specific packages of the work. The architect should issue the client with a programme and cash flow forecast so they know when to expect an invoice. This allows the client to prepare their finances accordingly. In addition it is imperative to make sure payment terms are clear.

Projects specific issues and business issues to be considered

Project specific considerations:

• What Is being asked for?/ How were you approached?
• Is the client clear about what they want?
• What is the extent of services required? Full, partial, just feasibility etc?
• Basic fee or additional services?
• Are contract administrator / lead consultant roles Included?
• What is the procurement route?
• Does sufficient information exist about the services being asked for?
• Are the services asked for beyond your expertise?
• Will additional consultants be needed?
• Is the programme reasonable?
• If there is a target cost, is it reasonable?
• What is the level of project complexity?
• Does it include work to an existing building or conservation work?
• Are there elements of repetition that may reduce the fee.
• Is there potential to use knowledge from previous projects.
• Likely expenses.
• Is it possible to benchmark against other practices / projects?
• Is there any requirement to give a maximum price?

Wider practice / business considerations:

• Is this a new client?
• What is their financial status?
• Have you performed credit checks and asked about them around the industry?
• Will the client be open to value incentives? If so should the practice take the risk?
• Are there sufficient resources?
• Is additional professional indemnity insurance (PII) cover required?
• Assess cash flow and fee forecasting.

Professional obligations:

• The fee should be confirmed in writing and explained to client.
• You should have proper resources for the delivery of the services required.
• You should have appropriate Professional Indemnity Insurance (PII) cover.
• You should have an Employment Policy in place.

Calculation considerations

Empirical data:

• Practice records (ie. % fee earning hours. Keep good time sheets)
• Building Cost Information Service.
• Colander.
• RIBA Business benchmarking.

Calculated prediction:

• Provisionally allocate resources and check against practice workload.
• Schedule activates and requirements.
• Identify real costs of staff.
• Identify ancillary costs such as travel, PII, hard/software.
• Direct costs; payroll, NI, pensions, CPD etc.
• Indirect costs; overheads and profit.

Ideally, perform a calculated prediction and test it against empirical data.

Typically, 70% 30% 10% - Salary Overheads Profit.

Comments

Consequences of missing these considerations;

• Delays if revisiting information
• Could potentially misinform the client–breach of duty
• Could result in extra fees, or larger construction costs; may be liable to the architect
• Could result in more serious disputes
• Could result in the architect being under resourced , invite stress and unwanted pressures