# Should all professionals' fees as a percentage be banned?



## kkelliher (27 Jun 2011)

In light of the way our economy burst are we any closer to the abolition of professional fees based on % of value?

Given the fact that there is no onus (ethics & personal intergrity aside) on a professional to keep down cost (or in respect to estate agents, sales price down) given the payment method, and given it has not served Ireland Inc well, I personally believe % fees should be banned by law but would welcome comments/views of others.


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## Brendan Burgess (27 Jun 2011)

If you are  not happy with paying a percentage fee to your architect or to your auctioneer, then you are perfectly free to negotiate some other arrangement with them and in fact, many customers do.


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## Docarch (27 Jun 2011)

IMHO it all depends what professional.

I think an estate agent charging a % fee for selling a house based on the market value of the house and a soilicitor charging a % fee for conveying a house, again based on it's market value, is outdated and in many ways is simply arbitrary! 

Whether the sale of a house is E250k or E2,500k, essentially the services provided by the estate agent in selling the house and a solicitor conveying the house are the same/pretty much defined (irrespective of the value of the house). 

I think an architect charging a % fee is acceptable (obviously I am slightly boased) given that the higher the construction cost usually means the bigger job which usually means more work to be done by the architect in terms of desigining, specifiying, detailing, inspecting on site, longer time on site (i.e. more visits), snagging, certifying, etc., etc.

An architcet over specifying a job, simply to increase his fees, will soon be found out (I can guarantee you that), especially with sites like this! People are a lot more clued in these days even down to what's required in terms of insulation.

Once the scope and scale of a project has been agreed (i.e. after the design is complete) you will often find that many architects will fix their fees at that stage.


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## kkelliher (27 Jun 2011)

My original post was not directly aimed at architects but all professionals in the property industry.


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## Mrs Vimes (27 Jun 2011)

kkelliher said:


> Given the fact that there is no onus (ethics & personal intergrity aside) on a professional to keep down cost (or in respect to estate agents, sales price down)



Estate agents are employed by the vendor, who is obviously trying to get the highest price he can.

Solicitors' professional indemnity insurance premium is to an extent determined by the value of the property they are involved in buying as the exposure of the insurer is related to the purchase price so while the work may be the same there *can* be a difference in overheads for buying a (much) more expensive property.


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## Docarch (27 Jun 2011)

kkelliher said:


> My original post was not directly aimed at architects but all professionals in the property industry.


 
Maybe you might then alter the thread title - it does say architects.


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## onq (27 Jun 2011)

No method of calculating  a fee should be "banned by law", as to do so would suggest that a crime had been  committed and this is not the case.

Percentage fees have arisen as a reasonable response to estimating the  kind of costs that may arise for a project of a given size, cost and  complexity.
They are not written in stone but represent a bargaining position  whereby a professional may have a reasonable expectation of profit from  work undertaken.
They are usually based on a sliding scale , with smaller complex jobs  with personal service costing proportionally more than larger simpler  jobs handled remotely.

A percentage rate is no less a fair contemplation of how the overall  costs and profits on a job should be addressed than the hourly rate.
The hourly rate, while it may be applied on the basis of supposed  competence and experience, is as much an estimate as the percentage  rate.

The hourly rate is less of an assurance regarding either the cost of the  running of a job or ensuring quality of service in a large company than  a sole tradership.
This is because with a large practice, one is never certain that the  person signing is actually carrying out the work or merely rubber  stamping the work of others.

If your want to contemplate fixed cost, which effectively equates the  cost of doing a professional job over time to single piecework, then you  are inviting people to over-price because risk is inherent in any job.
While an hourly rate allows for additional cost based on time, and a  percentage rate allows for additional cost based on the increased total  cost of a larger enterprise, the fixed rate does not allow for either.
It requires a precise definition of the work to be done, which most lay  clients are unsuited to carry out, and it requires them to undertake to  be bound by such a definition, which most are reluctant to do.
It is a ball-park gross estimate.

One this is certain, the current vogue of playing hard-ball with  professionals or not paying them at all is going to come back and bite  the punter at some point.
This may be either through us seeing a brain drain of emigration  reducing the competition or a reduction in service quality or a lowering  of work standards.
German or British firms of which I am familiar would not have put up  with the nonsense professionals here have had to accept here for the  past decade.

We are expected to carry out feasibility work at no cost with the  promise of being able to roll it up "if the scheme goes ahead".
This is for clients who expect not to pay your fees, but don't share the profits they make on foot of your work if it goes well.

At the other end we are expected to provide short- term [and sometimes not so short term] lending facilities for clients.
Look at the Traynor O'Toole and Murray O'Laoire collapses and the amount of client debtors they were carrying.
These bad practices are already stopping as no upturn is yet  in sight and accumulated profits are running out.

Lots of changes are on the way and it remains to see if Phil Hogan is a force for good or ill in all of this.


[broken link removed]

             All advice on AAM is remote from the situation and cannot   be                              relied                      upon                                                                                                                                                             as   a                         defence          or                           support     -                in                   and         of                                 itself       -                                          should                                        legal                                        action                         be                                           taken.
             Competent legal and building professionals should be asked            to                              advise        in                                                                                                                                                                    Real               Life              with                      rights            to                             inspect                 and                               issue                                      reports                   on                        the                                                          matters                at                                         hand.


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## onq (27 Jun 2011)

Docarch said:


> An architcet over specifying a job, simply to increase his fees, will soon be found out (I can guarantee you that), especially with sites like this! People are a lot more clued in these days even down to what's required in terms of insulation.


Agreed, this is an urban myth that I have never seen substantiated.
Typically it is confused with the entirely appropriate fees charged because a client has changed his mind and/or require additional work involving more research, changes to finished drawings or previously unscheduled overtime hours to remedy site details is required.



> Once the scope and scale of a project has been agreed (i.e. after the design is complete) you will often find that many architects will fix their fees at that stage.



This is normal practice but seldom gives the comfort you might expect.
In fact, during the negotiations the percentage fee estimate can be the bane of the architect by putting the bar too high for the client's mindset (as opposed to pocket).
He can find his legs taken out from under him by his client then denying him the necessary fee to provide, for example, sufficient limited inspections on site but still require him to certify.
Its a stupid architect who sees this as anything other than a case of negligence in the making, because certifying others mistakes comes back to haunt you.
We will sooner do the work for less and make proper visits and photographic records than certify in ignorance.


[broken link removed]

             All advice on AAM is remote from the situation and cannot    be                              relied                      upon                                                                                                                                                                as   a                         defence          or                            support     -                in                   and          of                                 itself       -                                           should                                        legal                                         action                         be                                            taken.
             Competent legal and building professionals should be asked             to                              advise        in                                                                                                                                                                       Real               Life              with                       rights            to                             inspect                  and                               issue                                       reports                   on                        the                                                           matters                at                                          hand.


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## kkelliher (28 Jun 2011)

Docarch said:


> Maybe you might then alter the thread title - it does say architects.


 
My thread title was altered by a Moderator and not myself


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## onq (28 Jun 2011)

I've asked the moderators for clarification on this and on another point, where a thread containing a rebuttal to RIAD_BSC was apparently deleted.

I am starting to get narked at people posting comments about how fees are calculated as if percentages are written in stone when for the sole traders I know they are merely a starting point and are seldom if ever realized as the actual fee income.

You'll see solicitors retiring in the forties having made their millions, and you'll find a lot of barristers living in Wellington Road, Dublin 4 and Dalkey County Dublin in big houses (and good luck to them), but very few architects can do this even at retirement and its not because they are work shy, its because the fees/costs equation is relatively poor compared to some other professions.

I'm not complaining about fees in general - back when there was a market I made a reasonably good living - but it wasn't double the industrial wage or anything like it.
But when I hear people on AAM talking about gross fee income as if it was nett profit and not merely turnover out of which all other costs and expenses have to be taken, then I get annoyed.

Gross Fees are the fees charge to clients for providing a professional service.
Let me be explicit - a well- run sole tradership may see 30-40% of gross fees as income/profit.
A small office may see 20% profits, out of which they have to take R&D funding, training, CPD seminars or risk falling behind.
A larger firm may find this figure is 10-15%, between rental costs, additional insurance premiums and the falling rate of percentage fees on larger and more costly jobs.

But remember - gross sees - however they are calculated - are not profits!

ONQ

[broken link removed]

             All advice on AAM is remote from the situation and cannot     be                              relied                      upon                                                                                                                                                                   as   a                         defence          or                             support     -                in                   and           of                                 itself       -                                            should                                         legal                                         action                          be                                            taken.
             Competent legal and building professionals should be asked              to                              advise        in                                                                                                                                                                          Real               Life              with                        rights            to                             inspect                   and                               issue                                        reports                   on                        the                                                            matters                 at                                          hand.


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## onq (28 Jun 2011)

As a direct response to kkelliher, I would have to answer no, but I would be open to argument.

Fees are based on a percentage of the Nett Building Cost and have been developed to a very fine point to offer both value for money to a client and reasonable return to a professional.
Some people seem to be relating  professional Fees back to the nett building cost as if its a profit  charged on the build cost to the Employer/Client.

Thy are mistaken in thinking this - fees are charged to make a profit on the cost of providing a service.
There is only a loose, empirical relationship between the nett building cost and the fee amount.
The fee amount is proportionally bigger for less costly projects for a very simple reason.

The architect spends as much time on an extension as on a mid-range office building.
I know - I have done both many times over - in fact the office is easier to complete.

Extensions are far more personal things than office blocks and must be "just right".
Offices are commercial undertakings with less personal issues to resolve.

So even with higher percentage fees an architect makes less money on an extension for the same amount of time.
For the record, my most intensive project to date was a private house of circa 15,000 sq.ft.
It had the scale of a mid range commercial building but was more highly serviced.


ONQ.

[broken link removed]

             All advice on AAM is remote from the situation and cannot      be                              relied                      upon                                                                                                                                                                      as   a                         defence          or                              support     -                in                    and           of                                 itself       -                                             should                                          legal                                         action                           be                                            taken.
             Competent legal and building professionals should be asked               to                              advise        in                                                                                                                                                                             Real               Life              with                         rights            to                             inspect                    and                               issue                                         reports                   on                         the                                                            matters                  at                                          hand.


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## kkelliher (28 Jun 2011)

Mrs Vimes said:


> Estate agents are employed by the vendor, who is obviously trying to get the best price he can.



is this not part of the reason we had a property bubble that was unsustainable. As in other countries if you put a property on the Market for a defined asking price it should be acceptable that if offered the asking price there should be an agreement. Otherwise go down the auction route. There is no rational behind % fees in this industry. 

Is there any more work in selling a property for 300k as allowed to 500k?


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## DB74 (28 Jun 2011)

kkelliher said:


> is this not part of the reason we had a property bubble that was unsustainable. As in other countries if you put a property on the Market for a defined asking price it should be acceptable that if offered the asking price there should be an agreement. Otherwise go down the auction route.



That's stretching it a bit. If a purchaser is willing to pay €500K for a house then why shouldn't the vendor accept the €500K. I disagree with gazumping though.




kkelliher said:


> There is no rational behind % fees in this industry.
> 
> Is there any more work in selling a property for 300k as allowed to 500k?



Well there probably is more work involved in getting a property sold for €500K than for selling the same property for, say, €450K.

And it's in the vendor's interest for the estate agent to get the best price for the property so the % acts as an incentive.

Otherwise why would an estate agent try to get the €500K if he has already earned his fee by agreeing a sale for €450K?


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## ajapale (28 Jun 2011)

kkelliher said:


> My thread title was altered by a Moderator and not myself


 
KK, your original title was the meaningless *'Fees on %' * such meaningless titles are in breach of our posting guidelines and such a breach normally results in the thread being locked or even deleted. Occassionaly a moderator might expand the title if he is sufficiently interested in the subject matter.

If you are unhappy with the title as it stands then as OP you are always free to edit it.

aj
moderator


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## onq (28 Jun 2011)

The current thread title is a little misleading.
There is nothing allied or indeed associated between architects and say estate agents or solicitors.
We may work for the same client, but we interrelate only peripherally   with others, many of whom are the greatest heatscalds you will ever   meet.

==========================

Project Managers / Client Representatives.

I've worked with one office that cost the client over €200,000 in   professional fees for abortive work that was not needed, and I've   endured another who was supposed to organize the health and safety and   legals on a job and did neither. But its swings and roundabouts. The   former one came back on another job and pointed out the need for a   specialist insurance that if not purchased could have left the job high   and dry. A mixed bunch. They claim to reduce the fees of others and   overall costs to justify their own fee. It may happen on some projects,   but I've yet to see it personally.

==========================

Solicitors

With solicitors, architects are usually under pressure to offer  certificates  from an early stage in the proceedings - one of the most  important  skills a young architect can acquire is saying "No, and  here's why..."  to a pushy solicitor, whose wheedling insistence could  expose an unwary  professional to the risk of pre-certifying or  over-certifying and set a  most unwelcome precedent for a young office  in future years.

Less usually with solicitors architects work supplying Reports and  Opinions to a  legal team run by a solicitor preparing a case. Again,  the most  important word to learn is "NO!" Solicitors will happily try  to get  others to do their work for them, such as researching lease with  maps on  them, merely because they have maps on them, when they are the  ones  getting paid by the hour to trawl through deeds and conveyances,  not  anyone else. Its the architects job to catch any final proof  reading errors prior to swearing the Declaration of Identity and to  ensure the work "compare" is used and not "inspect" which has another  legal meaning.

==========================

Estate Agents

With estate agents, these are people who put together deals and in many   cases lead the discussions on commercial developments during the early   stages. Just remember, their furnished information literally is not   worth the paper its written on - it usually says so in the disclaimer on   the back in microscopically small print. They tend to spend a lot of   time pressuring architects to engage in planning studies to say what   they want them to say about the likelihood of achieving the latest   multi-million Euro development.

We can all remember that tower in Ballsbridge on the Jurys site that got   refused, the outrageous price paid by McNamaras consortium for the  land  bank that put them on an unsustainable position and the tower in   Lucan/Clondalkin that got permission only to be overturned by An Bórd   Pleanála. So much for the dangers of talking things up.

Plus their fees are charged on the sale price, not the net building   price, so there is no incentive for them to cry "hold" to a price   rocketing into the stratosphere.

==========================

Architects work in a collegiate manner with some professionals. We   usually lead the design team where we try to co-ordinate all our efforts   to best effect. A list of such professionals might include:

In-house - salary or hourly rate:



 3D presenters/Graphic Artists
Architectural Technicians
 CAD Technicians
 Draftspersons
 
Design Team Professional offices - professional fees:



 Chartered Surveyor (land and property)
Landscape Architect (biodiversity, amenity screening, noise control)
 Quantity Surveyor (cost estimate, bill of quantities and contractual advice)
 Structural and Civil Consulting Engineer (structure and drainage)
 Mechanical and Electrical Consulting Engineer (services and energy usage)
 Interior Designer (environmental design of interior)
Other Professional offices - professional fees:

 Lighting Consultant
 Arborists/Tree Surgeon
Garden designer
 Fire Safety Consultant
 Health and Safety Consultant
 Disability Access Certificate  Consultant
Photographer
Graphic Artist
3D Modeler/Visualiser/Presenter
Sports/Wellness Consultant
Security Consultant
IT Consultant
 
The team will engage with other Nominated Sub-Contractors and Specialist Firms - agreed price.



 Piling and Groundworks
 Vibro-compaction
 Land Drainage
 Shoring and Scaffolding
 Timber Frame Specialist
Heating Contractor
Electrical Contractor
Plumbing Contractor
 Concrete Formwork
 Concrete Specialist
 Roofing structure
 Cladding
 Glazing
 Windows
 Doors
Re-constituted Stone
 MVHR systems
 Air Conditions Systems
 Under Floor Heating Systems
 Radiator Specialists
 Swimming Pool suppliers
 Sauna suppliers
 Vacuum systems
 Lift Manufacturer
 Lighting
 Sanitaryware
 Kitchen Suppliers
 
I won't go into the large population of interior firms and   suppliers including furniture, salvaged antiques and fitments, tiling, artwork, suspended ceiling, raised access   floors, etc.
I similarly won't include the well-known list of tradesmen that are  normally domestic to the main contractor or those artisans or craftsmen  involved in the built work like Stonemasons.

==========================

The above lists are not exhaustive and seek to outline the ranges of   people we work with, of them only the professionals charge fees.

I recently did work on my holidays for a client - it had to be done, but   would any salaried or P.A.Y.E. worker do that? Not in my very wide   experience.

Service like that is one of the reasons why you pay professionals reasonable fees.
We undertake to get the job done, whatever it takes.

I hope this helps those outside the profession to understand the nature   of professionals fees, and in particular the use of percentage fees as a   tool for calculating the agreed fee figure. They are not set in stone  and are seldom achieved.


ONQ

 [broken link removed]

              All advice on AAM is remote from the situation and cannot       be                              relied                      upon                                                                                                                                                                         as   a                         defence          or                               support     -                in                     and           of                                 itself       -                                              should                                           legal                                         action                            be                                             taken.
              Competent legal and building professionals should be asked                to                              advise        in                                                                                                                                                                                Real               Life              with                          rights            to                             inspect                     and                               issue                                          reports                   on                          the                                                             matters                  at                                           hand.


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## onq (28 Jun 2011)

ajapale said:


> KK, your original title was the meaningless *'Fees on %' * such meaningless titles are in breach of our posting guidelines and such a breach normally results in the thread being locked or even deleted. Occassionaly a moderator might expand the title if he is sufficiently interested in the subject matter.
> 
> If you are unhappy with the title as it stands then as OP you are always free to edit it.
> 
> ...



Thanks Ajay for clarifying that point
Separate thanks also for not locking the thread and allowing the discussion.
Its true to say that other debates on AAM have centred on architects percentage fees.
Previously, such debates have been started by laypeople who don't understand the nature of the building industry.
Hopefully this thread will broaden the debate to invite professionals to have their say.

ONQ


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## RIAD_BSC (28 Jun 2011)

These days, it isn't the professionals who set the prices. It is consumers, by dint of what they are prepared to pay. The professionals can discuss prices and fee structures all they like on AAM. But when the market funamentally shifts like it has done, they are just passengers like the rest of us. Until the available supply of services moves closer to demand, consumers have all the power and they will set the prices. Professionals will have to adjust their cost bases accordingly to match this. Complaining about it is like complaining about the weather. It is of no consequence. Move with the market, or go bust because you're over-priced and you can't get enough business.

Banning percentage fees via legislation would be barmy. If you don't want to pay a percentage, drop the professional and hire someone who'll do the work for a fixed price. You don't need a new law for that.


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## kkelliher (28 Jun 2011)

maybe someone can tell me how I edit a title?


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## onq (28 Jun 2011)

Go into Edit/Advanced and look for the thread title box ---> edit it. Save.

As the thread starter you should be able to do this.

ONQ

 [broken link removed]

              All advice on AAM is remote from the situation and cannot        be                              relied                      upon                                                                                                                                                                            as   a                         defence           or                               support     -                in                      and           of                                 itself        -                                              should                                            legal                                          action                            be                                              taken.
              Competent legal and building professionals should be asked                 to                              advise        in                                                                                                                                                                                   Real               Life              with                           rights            to                              inspect                     and                               issue                                           reports                   on                           the                                                              matters                  at                                            hand.


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## onq (28 Jun 2011)

Working for below cost is not a good policy.
You get what you pay for and only a fool expects to by a Rolls Royce for a Mini One price.

Supply price is not determined arbitrarily, but involves standards and quality as well as the means of production and competence.
Acquiring qualifications and competence requires years of training and these years and ongoing CPD have to be paid for  out of charging reasonable fees.

Some people never learn and advocate this approach; -

_"If you don't want to pay a percentage, drop the professional and hire  someone who'll do the work for a fixed price. You don't need a new law  for that."_
As I have already posted that professionals use the percentage fee as a starting point, it seems that "drop the professional" seems to be what this poster is all about.

Let those who are unwary and unwise follow RIAD_BSC's advice and carry on down the road to a building and/or design disaster.
I'll still be here to help you with the extensive remedial works and legal action that results.

For a reasonable fee.


ONQ

 [broken link removed]

              All advice on AAM is remote from the situation and cannot        be                              relied                      upon                                                                                                                                                                            as   a                         defence           or                               support     -                in                      and           of                                 itself        -                                              should                                            legal                                          action                            be                                              taken.
              Competent legal and building professionals should be asked                 to                              advise        in                                                                                                                                                                                   Real               Life              with                           rights            to                              inspect                     and                               issue                                           reports                   on                           the                                                              matters                  at                                            hand.


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## kkelliher (29 Jun 2011)

onq said:


> Go into Edit/Advanced and look for the thread title box ---> edit it. Save.
> 
> As the thread starter you should be able to do this.
> 
> ...


 
thanking you sir. my initial thread was never directed at Architects. They may be the bain of my life but I would never be so bold!!!!!!


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## kkelliher (29 Jun 2011)

The main reason for my original post was that given where we have come from and the effect that charging on a % has, is it correct. I understand everyone's point of view but during the boom if you wanted to sell your home you *had *to accept % charges as that is the way (bar the odd agent) the industry charged, You had to accept % charges from solicitors in the transaction, you had to accept % charges from Architects, from QS's from generally everyone as this was the way the majority charged. This is fact and based on nearly 15 years of dealing daily with these professions. There is always exceptions and I fully accept that but I am speaking generally.

In reality does it take more time or imput to sell a €400k house over a €500k house.... No. Also remember that the advertising done is now centralised through myhome and daft and others for most agents and the clients generally came to them

Does an architect have to do additional work if a client budgets in their build for a €35/m2 tile as apposed to a €150/m2 tile..... No

Does a QS have to do additional work for the same tile senario .......No

Does a solicitor have to do any additional work for the sale of a €400 or €500k house .....No and the insurance arguement does not stand up given that there was always solicitors as in every profession that charge a lump sum for a job.

there are many many examples. I fully understand the time and work involved in most professions to do their jobs and this is not in any way an atempt to undermine that work. 

My issue is the anti fairness, anti consumer, anti competitive and pro inflation issue of % charging which was and still is the norm in many professions. The arguement that you have an option to shop elsewhere is somewhat ignorant of reality in my opinion as in many case this was not and still is not an option given the demographics of most professions.


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## Firefly (29 Jun 2011)

I really don't see what all the hoopla is about to be honest. If you don't want a to go with an architect who works for a % fee find someone who will work for a fixed price. 

I'm no expert in this field and have no personal connections to architecure/architects, but I can only guess that architects that engage in cheap, fixed price projects will do little to entertain change requests by clients after the contract has been drawn up without steep charges been applied. 

Personally, we plan on a doing a pretty large renovation on our house with an extension etc in a few years time. Getting a good architect will be the number 1 priority for us. From a design perspective the last thing I want is to be sitting in my home after the build thinking "oh, we should really have put that window there and that door there". For other people design is not as important but for us it is. I have been in a few houses which were designed by achitects and you really know the difference. The use of space/light is especially good. 

When you think of how long you're going to be living in the house plus the costs if you get the design wrong (in both annoyance and possibly re-work) then it's an easy one for me. I'm not saying that I'd spend willy-nilly but I do think you have to look beyond the immediate costs to the finished product.


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## Mrs Vimes (29 Jun 2011)

kkelliher said:


> but during the boom if you wanted to sell your home you *had *to accept % charges as that is the way (bar the odd agent) the industry charged, You had to accept % charges from solicitors in the transaction,





kkelliher said:


> Does a solicitor have to do any additional work for the sale of a €400 or €500k house .....No and the insurance arguement does not stand up given that there was always solicitors as in every profession that charge a lump sum for a job.



So basically, some professionals set their fees in a way you don't like, others don't but you want to ban the ones that do?


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## monagt (29 Jun 2011)

% fee should be banned!!

I built a very large extension after getting a good price/a rural not a city price from a builder from the country I knew for 20 years.

The Architect I employed, who did not know the builder until they met on my build and who should 'be working for me', told the builder he was doing the job far too cheap, obviously it affected his % fee.

The professional fees should be negotiated up front (which will of course take into consideration, size, complexity, etc of the job) and the punter can get different quotes.


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## Complainer (29 Jun 2011)

Firefly said:


> but I can only guess that architects that engage in cheap, fixed price projects will do little to entertain change requests by clients after the contract has been drawn up without steep charges been applied.


Fixed price does not mean cheap. It means fixed.

I don't see a connection between fixed price vs percentage price and willingness to entertain change requests, except where those change requests will necessarily increase the overall bill. Indeed, with a percentage price fee, it is not in the architect's financial interests to entertain change requests that reduce the overall project cost.


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## Mrs Vimes (29 Jun 2011)

monagt said:


> The Architect I employed, who did not know the builder until they met on my build and who should 'be working for me', told the builder he was doing the job far too cheap, obviously it affected his % fee.



Perhaps he was worried that the builder would go under during the build or would cut corners or would not pay suppliers?


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## Firefly (29 Jun 2011)

Complainer said:


> Fixed price does not mean cheap. It means fixed.



I agree, but what I am talking about is specifically fixed prices that are cheap which is what's been popping up on this thread/forum. In this case I would think the architect is just going to do the bare minimum and will be chasing other such work rather than entertain client change requests...sort of a "stack em high, sell em cheap" model.



Complainer said:


> I don't see a connection between fixed price vs percentage price and willingness to entertain change requests, except where those change requests will necessarily increase the overall bill. *Indeed, with a percentage price fee, it is not in the architect's financial interests to entertain change requests that reduce the overall project cost.*



I take your second point in this regard and perhaps an architect could comment here as I have no experience in this. How are client requests dealt with, on a % cost model, should they want changes that will reduce the overall spend? (happens rarely I would have though but still)


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## onq (29 Jun 2011)

Docarch said:


> Seriously!  Just because somebody pays a professional a % fee does not mean they are being ripped off.



I've heard of 20% fees being charged by one office, but the official spread of fees review by RIAI suggests this was relatively rare.

ONQ


[broken link removed]

             All advice on AAM is remote from the situation and cannot     be                              relied                      upon                                                                                                                                                                   as   a                         defence          or                             support     -                in                   and           of                                 itself       -                                            should                                         legal                                         action                          be                                            taken.
             Competent legal and building professionals should be asked              to                              advise        in                                                                                                                                                                          Real               Life              with                        rights            to                             inspect                   and                               issue                                        reports                   on                        the                                                            matters                 at                                          hand.


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## kkelliher (29 Jun 2011)

Mrs Vimes said:


> So basically, some professionals set their fees in a way you don't like, others don't but you want to ban the ones that do?


 

if you read my posts properly you will note that this is not the case. 

I am one of these professionals. My initial discussion was on the basis of given what happened in the past and the effect of same should it be allowed to continue? As I have outlined on a number of occasions it is the idea not specifics with any one profession


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## kkelliher (29 Jun 2011)

in simple terms I would love to know what a % fee has to do with level of work required on a porject. Where is the connection. Where is the basis.

Just because its the ways things have been done in the past does not make it right.


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## onq (29 Jun 2011)

kkelliher said:


> thanking you sir. my initial thread was never directed at Architects. They may be the bain of my life but I would never be so bold!!!!!!



LOL! You're very welcome kkelliher - I value your contributions.

Feel free to make a cogent logical argument about architects from your direct experience.

As RIAD_BSC so stealthily pointed out, I am currently prevented by law  from calling myself one in practice, despite my prescribed qualification  and 21 years of post-graduate practice experience.

During that time I have met several architects whose work was not up to my standards as well as those whose work was excellent.

Patting ourselves on the back doesn't focus us on areas where we can be  better, although only focussing on the duds is unfair to the rest.

And for the record, I have no problem with discussing incidents of  outrageous fees, they'll be a million miles away from my experience I  can tell you.

A critical comment from a competent professional - not in the sense of his or her being "professional" per se, but of knowing the industry well - would be more than welcome.

ONQ


[broken link removed]

             All advice on AAM is remote from the situation and cannot      be                              relied                      upon                                                                                                                                                                      as   a                         defence          or                              support     -                in                    and           of                                 itself       -                                             should                                          legal                                         action                           be                                            taken.
             Competent legal and building professionals should be asked               to                              advise        in                                                                                                                                                                             Real               Life              with                         rights            to                             inspect                    and                               issue                                         reports                   on                         the                                                            matters                  at                                          hand.


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## Firefly (29 Jun 2011)

onq said:


> I've heard of 20% fees being charged by one office, but the official spread of fees review by RIAI suggests this was relatively rare.
> 
> ONQ
> 
> ...




 My favourite new building. I think a 20% fee for something like this to be justified. The site is pretty poor and it was a miracle to put something in there that looks so well.


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## onq (29 Jun 2011)

kkelliher said:


> in simple terms I would love to know what a % fee has to do with level of work required on a porject. Where is the connection. Where is the basis.
> 
> Just because its the ways things have been done in the past does not make it right.


 
A percentage fee is a tried and tested means of estimating what to charge for work in a given price range and complexity with an expectation of achieving a profitable return for the years work.
The rates are based on a balance of what the market will bear and what the practice needs to earn to sustain itself taking into account all factors that muse be paid for up to the point of delivery of service

Allegations of over-charging are easy to make but not to prove and I would suggest will be impossible to prove in the case of most sole traders.
This is a cyclical industry and at the moment many people cannot earn enough to survive, and many have not been paid for work done including myself.

If the myth of the well-paid architect were true we shouldn't be seeing architects firms go to the wall, or read stories of Part II qualified architects being paid below the minimum wage.
Why do such things happen in my profession - the simple fact is that an architect might have agreed a good fee, but he/she didn't get paid that good fee or were asked to do extra work at no extra cost.
The firm capitulates in order to get some money in, instead of setting up the fee initially with proper terms and conditions and an eye-watering penalty for non-payment of fees by the client - this will come in soon I believe.

Threatened non-payment of fees for good work is something salary-earners and PAYE wage earners never have to face.
Architects face this scenario all the time in relation to competent work already done and with an agreed fee in place.
This kind of criminality has to be dealt with in the medium term but for now its dealt with using percentage fees.

Its a bit like the insurance industry - the actions of rotten clients raise the premiums for the rest of us.

ONQ


[broken link removed]

All advice on AAM is remote from the situation and cannot be relied upon as a defence or support - in and of itself - should legal action be taken.
Competent legal and building professionals should be asked to advise in Real Life with rights to inspect and issue reports on the matters at hand.


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## onq (29 Jun 2011)

Firefly said:


> My favourite new building. I think a 20% fee for something like this to be justified. The site is pretty poor and it was a miracle to put something in there that looks so well.



High fees usually reflect one of three things [or all three]

A Difficult Brief

- requires a lot of additional client meetings, design team meetings, meetings with specialists, more design input and more time spent on site carrying out inspections - a difficult brief may arise from a difficult site, a demanding client, a difficult schedule of accommodation to satisfy within the constraints of statutory approvals or more factors. A city hospital is a typical example of such a brief.


A High Standard of Design in a Sensitive Location

- a prominent site or in the present case a difficult one which may have a relatively simple brief. Like the Difficult Brief building, such a building will involve many additional client meetings, more design input and more design team meetings, and the real fee-eater, meetings with stakeholders. The extension of a protected structure public building or the building or extension of a stadium would be two examples of such.


A Starchitect

- people pay over the odds for a "name" because there is a strongly  suggested link between buildings by such architects and an anticipated  raise in tourist revenue post-completion. Even where end users for this building are not  expected, people come to see the building. Daniel Leibeskind's theatre on Grand Canal Square would be such a building, which also had a constrained site and one of the more difficult building types to get right.

On that note, I heard a rumour that the construction cost of the entrance  facade alone ran into millions. That was the signature piece of the design, a facade that addressed a major new public space in Dublin's Inner City and it was important to get it right.

=======================

The above is design and complexity and co-ordination on a level far beyond the bread-and-butter work of most commercial practices, where even where there is good design input the fees seldom top 7% and often dip below 4%. Commercial work is the cutting edge of most practices, because its the bulk of the square footage and affects huge swaths of the environment so a good balance must be struck. Given that its the bulk of the work, the occasional 20% fee on mid range work will not pull the average fees earned that year into the 20% bracket or anywhere near it. If the firm sees profits in double figures from such fees its exceptionally well run. Compare such profit levels with other businesses where the principals carry a similar risk of being sued. Its far less rosy a picture.

Building professionals get bad press because they perform piece work for fees - their revenue isn't spread over millions of customers and they have to cover all costs, bad debts and late payments.
I can hear one poster revving up to try to make a point of this, but its the exact same for non-food shops - over half their sales are generated in the three months to Christmas.
The rest of the year, their rent on the premises and their staff salaries, all rest for their continuance on those three months.
Yet you don't see complaints about the 50% mark ups on good being sold in the shops.


ONQ


[broken link removed]

             All advice on AAM is remote from the situation and cannot       be                              relied                      upon                                                                                                                                                                         as   a                         defence          or                               support     -                in                     and           of                                 itself       -                                              should                                           legal                                         action                            be                                             taken.
             Competent legal and building professionals should be asked                to                              advise        in                                                                                                                                                                                Real               Life              with                          rights            to                             inspect                     and                               issue                                          reports                   on                          the                                                             matters                  at                                           hand.


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## Docarch (29 Jun 2011)

Just to point out that just because an architect charges a % fee, it does not automaticlly mean s/he are making a huge profit!

Some people may be shocked but I did a small project on a protected structure. My fee was 14.5%. I made a 'loss'!

When I say loss I mean that I know on average how many hours a year I work or can work. I know what my overheads are. I then know what on average I need to make per hour to cover my overheads and pay myself (a fairly normal salary). When I divided the fees charged (at 14.5%) by the hours spent, it came in way below the average hourly rate I need to keep going. 

Some people on here seem to think that a % fee means that the architect is coining it!!!

With regard to kkellihers point way back on architects % fees and the example of tiles - some architects (including myself) would not base % fees on construcion costs/contract sums including finishes for that very reason. In my case I exclude from fee calculations things like kitchens, wardrobes, floor & wall, finishes, sanitary ware, etc. It is irrelevant, in most cases, to the architect how much these things cost. 

I'd also agree with what Firefly has alluded to. If you are on a fixed fee there is no flexibility. If on a low fixed fee, the temptaion is to take the easy route, keep everything simple so you can get out of the project in the shortest time possible. So opportunities in terms of design can be lost!

The fairest way to charge for work is on an hourly basis but most clients will not go for that!


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## onq (29 Jun 2011)

Firefly said:


> I agree, but what I am talking about is specifically fixed prices that are cheap which is what's been popping up on this thread/forum. In this case I would think the architect is just going to do the bare minimum and will be chasing other such work rather than entertain client change requests...sort of a "stack em high, sell em cheap" model.
> 
> 
> 
> I take your second point in this regard and perhaps an architect could comment here as I have no experience in this. How are client requests dealt with, on a % cost model, should they want changes that will reduce the overall spend? (happens rarely I would have though but still)



I'll answer, since Complainer is not an architect.

It depends on whether work has been carried out in relation to the original design brief or not.

Percentage fees are not just used to calculate the overall fee, but also the portion of the fee that is allocated to the several stages of the design such as

- initial briefing
- required research
- initial design proposal

(at this point a cost estimate should be produced for client review and its at this point that any major reductions in the brief should be introduced if fee reductions are expected)

- developed design

(including any revisions due to client requirements, Local Planning Policies and Objectives, Fire Safety, Health and Safety Plan, Disabled Access and Building Regulation Compliance Generally)

- Statutory Approvals Processes
- Revisions due to Statutory Approvals Processes
- Tender Process
- Appointment of Contractor/negotiated tender
- Buildability/ Cost-effectiveness review.
- Working Drawings for Construction
- Building Programme/Site Inspections/ Certification of Monies
- Opinions of Compliance

If the client has reviewed costs at initial design stage and instructed the design team to proceed with developed design on the basis of the original design and only changed his mind at some stage after that, there could likely be nett additional fees to pay, not a reduction in fees.

In other words, the client changing his mind after work has been done  means he still has to pay for the work that's been done up to that  stage.

This is because the bulk of the general design work gets done before planning stage and the bulk of the detail design gets done before tender stage.

Percentage fees are neither fair to all parties nor applicable in some cases.
We once worked with a demanding client whom we knew would make changes all the way through a design.
We agreed a monthly rate for the duration of the project.
The client got our best attention on a daily basis.
We got paid a reasonable fee.

I'll finish by noting that most changes are not reductions and not all reductions in plan area save proportional amounts of money.
On the job I referred to above, there were only two changes that reduced the specification and/or the accommodation.
All the other changes increased the area of the building or its complexity and some introduced new internal spaces.

This reflects my experience on most jobs - clients seldom reduce the brief of their own accord.

ONQ


[broken link removed]

             All advice on AAM is remote from the situation and cannot        be                              relied                      upon                                                                                                                                                                            as   a                         defence          or                                support     -                in                      and           of                                 itself        -                                              should                                            legal                                          action                            be                                              taken.
             Competent legal and building professionals should be asked                 to                              advise        in                                                                                                                                                                                   Real               Life              with                           rights            to                              inspect                     and                               issue                                           reports                   on                           the                                                              matters                  at                                            hand.


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## onq (29 Jun 2011)

Complainer said:


> Fixed price does not mean cheap. It means fixed.
> 
> I don't see a connection between fixed price vs percentage price and willingness to entertain change requests, except where those change requests will necessarily increase the overall bill. Indeed, with a percentage price fee, it is not in the architect's financial interests to entertain change requests that reduce the overall project cost.



Correct on both counts.

Fixed price contracts usually contain a built in level of "fat" to allow for changes that can occur during the design, statutory approval or building process.
As against this with a percentage fee, reasonable change requests introduced at the initial design stage or as a consequence of the design process and statutory approval process do not normally attract additional fees.

An example of this would be the conditions substitution of a creche for two houses in a housing estate layout plan required for planning agreement after permission is granted.
Another example would be a planning agreement drawing graphically showing the conditioned phasing of the development for a planning approval.

Something that would likely attract additional fees would be the complete redesign of a sector or phase of a housing development.
However unless totally different house types were required, the fee increase could be less than 10% or so.

I've commented on the likelihood of overall fee reductions based on changes in a separate post.
Its not so much that its not on the architect's interest, its that fees are due on work already done.
An overall reduction is only likely therefore if an early call is made, usually after the initial design review.

ONQ


[broken link removed]

             All advice on AAM is remote from the situation and cannot         be                              relied                      upon                                                                                                                                                                               as   a                         defence           or                                support     -                in                       and           of                                 itself         -                                              should                                             legal                                           action                            be                                               taken.
             Competent legal and building professionals should be asked                  to                              advise        in                                                                                                                                                                                      Real               Life              with                            rights            to                               inspect                     and                               issue                                            reports                   on                            the                                                               matters                  at                                             hand.


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## onq (29 Jun 2011)

kkelliher said:


> The main reason for my original post was that given where we have come from and the effect that charging on a % has, is it correct. I understand everyone's point of view but during the boom if you wanted to sell your home you *had *to accept % charges as that is the way (bar the odd agent) the industry charged, You had to accept % charges from solicitors in the transaction, you had to accept % charges from Architects, from QS's from generally everyone as this was the way the majority charged. This is fact and based on nearly 15 years of dealing daily with these professions. There is always exceptions and I fully accept that but I am speaking generally.



The architects scale of fees was dropped by the RIAI - as long ago a 1999 if memory serves.
Please don't hold me to that date - perhaps Docarch or another RIAI member could comment.

Here is a thread commenting on fees in general from Architect Mark Stephens'  website -


You might find the comments thereon informative.

Neither the dropping of the scale of fees nor the comments in the thread above show that the percentage fees method of charging was abandoned during the last 10 years.
On the contrary, the thread above suggests that percentage fees, lump sums and time charges all have their place when proposing fees to a client.

There are horses for courses in other words.

ONQ


[broken link removed]

             All advice on AAM is remote from the situation and cannot          be                              relied                      upon                                                                                                                                                                                  as   a                         defence            or                                support     -                in                        and           of                                  itself         -                                              should                                              legal                                            action                            be                                                taken.
             Competent legal and building professionals should be asked                   to                              advise        in                                                                                                                                                                                         Real               Life              with                             rights            to                                inspect                     and                                issue                                            reports                    on                            the                                                                matters                  at                                              hand.


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## Docarch (29 Jun 2011)

onq said:


> At the risk of totally deflating your argument, the architects scale of fees was dropped by the RIAI - as long ago a 1999 if memory serves, but dont' hold me to that and perhaps Docarch could reply.


 
Yes, pretty much 10 years ago the RIAI dropped any suggested or recommended fee %'s from their published fee agreements.  What they do now is publish fee surveys (that they issue every couple of years) for architects and their clients to use as a tool to negotiate fees. 

The Competition Authority a number of years ago investigated many of the main professions (the likes of doctors, dentists, barristers, etc.) and architects.  Their findings were, for architects, that they were happy that there was healthy competition amongst architects in terms of fees and they were also happy that the RIAI was in no way setting or trying to influence what fees should be.


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## onq (29 Jun 2011)

monagt said:


> % fee should be banned!!
> 
> I built a very large extension after getting a good price/a rural not a city price from a builder from the country I knew for 20 years.
> 
> ...



monagt,

That's one inference that could be drawn, but there are others that should be drawn.

======================

#1 Below Cost Building

If the builder is working "below cost" he could have gone bust during the work or carried out substandard or defective work by omission or substitution of cheaper/inferior alternatives.
Alternatively, builders who price very cheaply to get selected from the tender list often moither both the client/employer and architect with extras to bring their work back to profitability.
Finally a builder that is not used to working in a new area may not be aware of hidden costs that may raise his prices - e.g. local suppliers prices vs increased transport costs for materials.

A tender selection from at least three builders would have given you a good idea of the range of prices out there.

One builder may be significantly below the market price to a point where it is clear he is operating below cost or without a sufficient awareness of local cost of doing business.
In such a case your architect would have been quite correct to discuss this with him as well as the likely implications for you, in your role his client and the employer, if that builder is appointed.
your architect not taking a professional overview of the pitfalls of unusually low pricing is not him acting unprofessionally, but acting professionally to ensure that project is costed properly.

In your case, you only went with one builder, a personal acquaintance of yours, and so the benefit of reviewing the spread of tenders did not arise.

======================

#2 Expected Fee Income

The architect may have formed an idea about the likely fee figure based on percentages for normal costs for that kind of project.
When your builder came in with a relatively low bid he saw any profit in the work go out the window or perhaps saw a loss become evident.
It appears that it wasn't that your architect was trying to increase his fee to an outrageous level - he was trying to get it up to his normal level.
That's why I have posted previously about the use of percentage fees as a basis for an agreed figure - everyone needs to break even on any job.

If people persist in operating on a below cost basis, whether walking into an unknown situation like your builder or working for low fees like your architect - they eventually go bust.
You may wrongly comfort yourself with the thought that this isn't your problem but the defects liability period is a year and retention is seldom enough to pay another builder to snag the work.
Retention is used to induce your appointed builder to come back and snag the work and its a nett cost to him, whereas any newbuilder will charge on a with profit basis, possibly + the 1/19th as well.

======================

That having been said I'm now hooked on this story.

Did your the builder of long acquaintance raise his price once he realized the cost of doing business where you live?
Did you dismiss your architect for what you saw as his apparent disloyalty and unprofessionalism?
Did you pay your architect revised fees based on an increase in the price?
Was the extension completed to a competent standard?

ONQ


[broken link removed]

             All advice on AAM is remote from the situation and cannot           be                              relied                      upon                                                                                                                                                                                     as   a                         defence             or                                support     -                 in                        and           of                                   itself         -                                               should                                              legal                                             action                            be                                                 taken.
             Competent legal and building professionals should be asked                    to                              advise        in                                                                                                                                                                                            Real               Life               with                             rights            to                                 inspect                     and                                 issue                                            reports                     on                            the                                                                 matters                  at                                               hand.


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