Last edited 02 Jun 2017

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

[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

[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.

[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