Last edited 10 May 2016

Fee considerations for architects

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Contents

[edit] Background

  • The monopolies commission and OFT forced the RIBA to abandon Fee Scales.
  • 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.

[edit] Project considerations

[edit] ASSESS CLIENT RISK

  • How much support will be required? (ie: is the client experienced or not?)
  • How many stakeholders are there to satisfy?
  • Are there multiple requirements as a result that could complicate the brief?
  • Is the client's budget reasonable, can the project be achieved within it?

[edit] ASSESS PROJECT SCOPE

  • What is the extent of services required? Full, partial, just feasibility etc?
  • Is the client clear about what they want and the brief fully realised? If not suggest a time-based fee for the early stage work then a fixed fee for the whole project. Consider the possibility of 'scope creep'.
  • What is the procurement route? Traditional will require more detailed design with possible contract administrator duties.

[edit] ASSESS POSSIBLE LEGISLATIVE RESTRICTIONS

  • Does it include work to an existing building or conservation work?
  • Are there any possible contentious issues that may cause delays?
  • Are the services required beyond your expertise? Will additional consultants be needed?

[edit] ASSESS PREVIOUS EXPERIENCE

  • Does the practice have previous experience in the sector? Lack of experience can lead to poor estimation of cost.
  • Is there potential to use knowledge from previous projects?

[edit] ASSESS PROJECT PROFILE

  • Consider the building type and the level of project complexity. Is it a new build? Refurbishment? Historic? (traditionally refurbishment and historic carry higher fees)
  • Consider whether the risk profile of the project is high or low.
  • Are there elements of repetition that may reduce the fee?
  • Does sufficient information exist about the services being asked for?

[edit] ASSESS CLIENT REQUIREMENTS

  • What is the delivery requirement - does the project have to be delivered in BIM or another specific programme / method?
  • Consider the speed of delivery required. Is the client's programme reasonable? (This will affect the resourcing demands and is required under RIBA principle 2.5). Fast track projects require additional fees because the architect may need to hire additional staff, pay overtime and re-schedule other work
  • Basic fee or additional services? Are contract administrator / lead consultant / lead designer / principal designer roles Included?

[edit] OTHER

  • What is being asked for?/ How were you approached?
  • How is the project funded, are there other stakeholders/demands to be aware of?
  • Likely expenses.
  • Is it possible to benchmark against other practices / projects?
  • Is there any requirement to give a maximum price?

[edit] Professional obligations

  • The fee should be confirmed in writing and explained to client.
  • You should have proper resources/ competence for the delivery of the services required.
  • You should have appropriate Professional Indemnity Insurance (PII) cover.
  • The architect should be satisfied the proposal will not conflict with any relevant codes of professional conduct, or other commissions/commitments in the office.
  • The architect must act with reasonable skill and care.
  • The architect must keep the client informed of progress in the performance of services and the need to appoint specialists/consultants.
  • The architect must collaborate with the project team and integrate their work.
  • The architect must act on the behalf of the client where necessary/as set out in the agreement.

[edit] Wider practice / business considerations

  • Are there sufficient resources?
  • Is additional PII cover required?
  • Assess cash flow and fee forecasting.
  • Is this a new client?
  • What is their financial status?
  • Have you performed credit checks and asked about them around the industry?
  • Does the client have the authority and resources to commission the work?
  • Is the practice likely to get repeat work from this client? If so, the fee could be lowered to it make more appealing.
  • Will the client be open to value incentives? If so should the practice take the risk?
  • You should have an Employment Policy in place.
  • Watch out for bespoke appointments, including a demand for higher levels of skill, breach of performance warranties and stretching of collateral warranties to longer than the appointment lifespan.
  • Ensure there is a liability cap.

[edit] Calculation considerations

[edit] Work stage fees

  • It is common to time charge during the early stages.
  • What is the procurement route?
  • Is the appointment for normal service?
  • Architects add most value up to planning, but more resources are required in later stages.

[edit] Acknowledging added value

  • Incentive fees: (ie % of value increase on land if planning is received.)
  • Equity shares.
  • Value framework (developer led where fees are agreed traditionally and then expressed as a % of the overall project profit margin).

[edit] Resource calculation

[edit] Empirical data

[edit] 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.

[edit] Traditional types of fee

  • Percentage fee. Geared towards full services and well-defined projects. Not always suitable.
  • Lump sum. Client benefits form certainty. For each work stage or one sum split between work stages.
  • Fixed Lump Sum. It may be unwise to a agree fixed lump sum with no variation provision.
  • Variable Lump Sum. Adjusted based on updated cost information at the end of each stage.
  • Time charge. This is high risk for the client.

[edit] Definition for client

  • Fee for basic normal services.
  • Fee for additional services.
  • Time charge provision.
  • Expenses and dispersements.
  • If the client has not confirmed the terms of the agreement then include; terms and conditions, other consultant roles, programme matters.
  • QA status.
  • Specialist skills in house.
  • Recent completed projects.
  • Staff CVs.

[edit] Find out more

[edit] Related articles on Designing Buildings Wiki