Architect fees query

[helvetica]

Can anyone help me with a query? If an architect charges say 10% of your build cost, should they count things like a wood floor in that cost? that is, assuming you have chosen your own floor, and are paying a professional separate to your builder to fit them.

If so, why would they qualify for a percentage of this and many other elements of a build?

many thanks

 

[Guns N Roses]

I believe the fee is based on a percentage of the contract price.

If the floor is included in the contract documents and the architect supervises it's installation, then yes they will include it in their fees.

If you want to keep the professional costs down, specific your house as builders finish in the contract and organise finishes such as tiles, timber flooring, kitchen yourself after.

 

[helvetica]

Thanks GnR

 

[nai]

Do architects and other professionals still get to charge on a % basis ?

Is there any reason they can't provide a fixed fee quote - that way you know what they're going to deliver and how much it will cost you at the outset without having to take additional fees into account when you're pricing your build ?

 

[helvetica]

The problem is that as a design evolves the price is a moving target. I can see why an architect would be wary of the budget going way over the fixed fee. Having said that it's all open to negotiation, the RIAI guidelines are just that, guidelines. If you do come to an unusual agreement with your architect though, get it in writing. I speak from experience.

 

[RedDevil]

A fee should be based upon work done and not be based upon the cost of the build.
Anything else should not be agreed to, such is a hangover from the boom

 

[RainyDay]

I think it's wrong to have a % fee, as this incentivises your architect to let the overall price increase. I'd be inclined to go the other way - offer him a % of any price savings he can get below a certain price. Or just a fixed fee for fixed work.

Have a chat with him about his PI insurance, and how you can be confident that the insurance policy will still be active in 10 years time if you need to claim off it then.

 

[Docarch]

The problem is that as a design evolves the price is a moving target.

Exactly, more often than not clients move the goalposts, especially on house extension and refurbisment projects, with items of work added along the way as the design evolves.

As an example, I am doing a project now that started off as a simple reorganisation of a kitchen and a simple extension to that kitchen.

Now...in addition to this, there is a porch to the front of the house, re-wiring throughout the house, new windows to be the existing house, painting and decorating to the enstire house, and, the conversion of a box bedroom to an EnSuite.

Additional works = additional time designing, detailing, specifying, inspecting on site, snagging, etc., etc.

So, on a % basis, the project has a higher value but the fees increase accordingly (to cover the extra time input/work invoved). If the initial fee quote was fixed - fo the work to the kitchen - then with every additional item of work added, you would have to go back, cap in hand, to the client, looking for more fees...that gets annoying (on both sides!).

That's the reason that many architects charge % fees. Where a fixed fee is required - then the client has to be very clear outset that that fixed fee is for a fixed service.

Many architects will also work on a dual fee basis, in terms of starting on a % basis, and, then, when the scope of works has been established (and all the works the client actually wants to do has 'come out in the wash') fix fees from that point on.

As to 'celtic tiger' fees and % fees, bear in mind that a project that is E200K now, would have been likely to have been E300K 6/7 years ago. So, if the architect is still charging a fee of typically 10%...the architect has in effect reduced fees 33% since the 'celtic tiger'.

To answer the OPs query, some architects will exclude what I call 'client supply items', such as timber flooring, tiles, sanitary ware, the kitchen, and the likes, from the build cost/contrcat (and therefore not charge fees in relation to same) if the client is happy to deal with the selection, sourcing and dealing with same.

I believe where % fees get a bad name is from solicitors (conveying houses) and estate agents (selling houses). Hard to justify a % fee for conveying/selling houses based on market value as this varys hugely from area to area but, in theory, the amount of work to convey/sell the house is the same (no matter what the market value is).

 

[Guns N Roses]

Exactly, more often than not clients move the goalposts, especially on house extension and refurbisment projects, with items of work added along the way as the design evolves.

As an example, I am doing a project now that started off as a simple reorganisation of a kitchen and a simple extension to that kitchen.

Now...in addition to this, there is a porch to the front of the house, re-wiring throughout the house, new windows to be the existing house, painting and decorating to the enstire house, and, the conversion of a box bedroom to an EnSuite.

Additional works = additional time designing, detailing, specifying, inspecting on site, snagging, etc., etc.

So, on a % basis, the project has a higher value but the fees increase accordingly (to cover the extra time input/work invoved). If the initial fee quote was fixed - fo the work to the kitchen - then with every additional item of work added, you would have to go back, cap in hand, to the client, looking for more fees...that gets annoying (on both sides!).

That's the reason that many architects charge % fees. Where a fixed fee is required - then the client has to be very clear outset that that fixed fee is for a fixed service.

Many architects will also work on a dual fee basis, in terms of starting on a % basis, and, then, when the scope of works has been established (and all the works the client actually wants to do has 'come out in the wash') fix fees from that point on.

As to 'celtic tiger' fees and % fees, bear in mind that a project that is E200K now, would have been likely to have been E300K 6/7 years ago. So, if the architect is still charging a fee of typically 10%...the architect has in effect reduced fees 33% since the 'celtic tiger'.

To answer the OPs query, some architects will exclude what I call 'client supply items', such as timber flooring, tiles, sanitary ware, the kitchen, and the likes, from the build cost/contrcat (and therefore not charge fees in relation to same) if the client is happy to deal with the selection, sourcing and dealing with same.

I believe where % fees get a bad name is from solicitors (conveying houses) and estate agents (selling houses). Hard to justify a % fee for conveying/selling houses based on market value as this varys hugely from area to area but, in theory, the amount of work to convey/sell the house is the same (no matter what the market value is).

Good post! You explained it very well.

 

[RainyDay]

Is it really that annoying to have to manage scope and renegotiate fees with clients? I presume that when you wear your Project Manager hat, you are well used to managing scope of builders and renegotiating fees as a result. It's just business, and a bit of clarity around scope and professional relationship works both ways.

Also, I think you're not quite understanding the solicitor's role in conveyancing. Their role is all about risk, and the level of risk is directly proportional to the value of the property. They are on the hook for their assurances of 'good marketable title', hence the % fee. But like most things, it is up for negotiation.

 

[Docarch]

Is it really that annoying to have to manage scope and renegotiate fees with clients?

Very simply...yes. A client could have a handful of revised/additional fee proposals. That's a bit of a mess?

That's why % fee is straight forward and everybody knows where they are.

In terms of what you said above about incentivising the architect to 'let' overall prices increase? That's one reason to go to (competetive) tender and I always ask clients to bring at least one builder (that has come recommeded to them) to price the job (essentially for balance...so they know that I am not sending out to tender to selected expensive builders).

Just also to say, for very simple straightforward jobs - and where there is a clear brief - I will give clients a fixed fee proposal (if they wish), but, sometimes that can work out more expensive than the % fee option. When you are doing fixed fee proposal there is an element of hedging.

Also, I think you're not quite understanding the solicitor's role in conveyancing. Their role is all about risk...

...and an architects role in a project is nothing to do with risk? Noted your own comment on PI insurance above.

I would suggest that architects are exposed to more risk being involved in a projcet than any solicitor conveying a property?

 

[RainyDay]

Very simply...yes. A client could have a handful of revised/additional fee proposals. That's a bit of a mess?

That's why % fee is straight forward and everybody knows where they are.

It's between you and your client to work out, but I'm not sure why it is 'a bit of a mess' for an architect, but fairly routine for the builder to deal with revisions, changes and additional cost proposals?

In terms of what you said above about incentivising the architect to 'let' overall prices increase? That's one reason to go to (competetive) tender and I always ask clients to bring at least one builder (that has come recommeded to them) to price the job (essentially for balance...so they know that I am not sending out to tender to selected expensive builders).

Just also to say, for very simple straightforward jobs - and where there is a clear brief - I will give clients a fixed fee proposal (if they wish), but, sometimes that can work out more expensive than the % fee option. When you are doing fixed fee proposal there is an element of hedging.

Interesting to note that you see the value of 'pricing the job' for the builder, but not for yourself. I wonder why?

...and an architects role in a project is nothing to do with risk? Noted your own comment on PI insurance above.

I would suggest that architects are exposed to more risk being involved in a projcet than any solicitor conveying a property?

But yet you didn't mention risk in your explanation of the % fee basis?

 

[Docarch]

Interesting to note that you see the value of 'pricing the job' for the builder, but not for yourself. I wonder why?

Not sure where you are going with this?

When I meet a (potential) client. I give them a detailed fee proposal. They accept it or they don't. If they choose me (and my % fees) well and good. If they don't choose me, so be it. A (potential) client may seek to get 10 fee proposals from 10 architects...it's a free/open/competitive market. I am not forcing my fee structure on any client. Clients shop around.

What I would also suggest is that a client could select an architect with a fixed fee proposal for a fixed service. If that client changes their mind/adds some elements of work, there is nothing stopping the architect doubling their rates for the additional service that may be required? So, you could argue that a % fee is pretty transparent.

As for builders, yes, get prices from builders, but, in my experience, clients very often do not go with the cheapest builder.

The cheapest does not always = the best!

But yet you didn't mention risk in your explanation of the % fee basis?

You were the one that connected % fees and risk suggesting that a house, with a higher market value, is a riskier prospect for a solicitor to convey than a house with a lower market value...but the process of conveying both is essentially the same.

All I was saying in relation to % fees, is the bigger the job, the more work there is for the architect to do, so the more they should be paid in terms of fees...and, in terms of risk...bigger job = bigger risk.

 

[RainyDay]

Not sure where you are going with this?

Honestly, neither am I. I’m not trying to ‘go anywhere’ – I’m just putting out an alternative view.

When I meet a (potential) client. I give them a detailed proposal. They accept it or they don't. If they choose me (and my % fees) well and good. If they don't choose me, so bit it.

A (potential) client may seek to get 10 fee proposals from 10 architects...it's a free/open/competitive market.

As for builders, yes, get prices from builders, but, in my experience. clients very often do not go with the cheapest builder.

Yes, it’s a free market, and clients and architects are free to act either way. I’m suggesting that clients might like to think about a business arrangement that doesn’t incentivise the architect to increase the overall costs of the job. It’s just a suggestion really – it may go against tradition, but the ‘traditional’ approach doesn’t seem to be in the best interests of the client.

You were the one that connected % fees and risk suggesting that a house, with a higher market value, is a riskier prospect for a solicitor to convey than a house with a lower market value...but the process of conveying both is essentially the same.
All I was saying in relation to % fees, is the bigger the job, the more work there is for the architect to do, so the more they should be paid in terms of fees...and, in terms of risk...bigger job = bigger risk.

Just a gentle dig at you – if risk really is a factor, how come you didn’t mention this when you were initially explaining the % fee?

 

[fergo]

Conveyancing on an old house is one risk and on a new one completely different, either way the legal system commutes the risk to the surveyor, or now for a new property under the new BCA to the design or assigned certifier so in reality I still don't understand a %age conveyancing fee structure other than there is more money in a larger trough, perhaps a change is on the way??

 

[RainyDay]

either way the legal system commutes the risk to the surveyor, or now for a new property under the new BCA to the design or assigned certifier

This applies to the construction risk, but not to the title risk. The legal professional still bears the risk of ensuring 'good and marketable title'.