CHOP 3.9 - ARCHITECTURAL DESIGN SERVICES AND FEES Flashcards
Construction Cost
The construction cost is the total cost of the work to the client to construct all elements of the project designed or specified by, or on behalf of, or as a result of coordination with the architect.
Construction cost excludes the compensation of the architect and consultants, land cost, land development charges and other professional fees.
Fee
The amount of compensation paid to the architect for the provision of specific services. Reimbursable expenses or disbursements are not included.
Fixed Fee OR Lump Sum OR Stipulated Price
One stated sum of money for the performance or provision of specific services.
Percentage Fee
A method of compensation which links the fee for architectural services to a percentage of the construction cost of the project. The percentage will vary depending on the type of building, the construction value, and the type of construction contract.
Per Diem
Allowance or payment for each day.
Service
Work performed for, or the doing of work on behalf of, an employer or client; benefit conferred, or exertion made, on behalf of someone; work comprised in whole or in part of labor, advice or supervision.
The Architects Basic Services
By regulation, as self-governing professionals, architects are required to provide an appropriate level of services. Being self-regulated means that only the architect may determine the expected quality of professional services delivered.
The architect is required to provide an appropriate level of professional services, and consequently fees must be adequate to ensure that this level is achieved.
An architect can be held to account for the work they do regardless of the fee. Professional duty requires attention whether an architect is working for a reasonable fee or for no money at all.
Basic And Additional Services
Typically, architectural services are focused on the design and delivery of a building.
These steps constitute the most commonly understood activities:
1) schematic design;
2) design development;
3) construction documents;
4) bidding and negotiation;
5) construction phase (contract administration).
Identification Of Services
The success of a project depends on the proper identification of services. At the outset, the architect – together with the client – must determine the professional services required for the project. Once this is done, the architect can prepare a proposal of fees, scope and schedule, and negotiate an agreement with the client.
Methods Of Compensation
Both parties – architect and client – will benefit if the architect receives adequate compensation for the professional services provided. Compensation is usually by one of the following methods:
1) percentage (of the construction cost);
2) time basis (per diem or hourly rates);
3) lump sum (or fixed fee); or
4) any combination of the above.
When calculating the distribution of the fee over the traditional five phases of a project, the following breakdown is typical:
1) Schematic Design = 12.5%
2) Design Development = 12.5%
3) Construction Documents = 50%
4) Bidding and Negotiation = 2.5%
5) Construction Phase = 22.5%
(Contract Administration)
It is not uncommon for the phased breakdown of fees on projects using BIM to resemble the following:
1) Schematic Design = 20-25%
2) Design Development = 20-25%
3) Construction Documents = 25-35%
4) Bidding and Negotiation = 2.5%
5) Construction Phase = 22.5%
(Contract Administration)
The three usual methods of compensation use the following methods of fee calculation.
1) Percentage of the construction Cost
2) Time Basis (Per Diem and Hourly Rate)
3) Lump Sum or Fixed Fee
Percentage of the construction Cost
Percentage fees are, to a certain extent, contingent on the size and type of project as well as the scope of services required. For example, the schedules generally recommend:
1) lower percentages for simple buildings or buildings with a higher construction cost.
2) higher percentages for buildings which are more complex or have a lower construction cost.
Time Basis Per Diem
A per diem or hourly rate is often the most appropriate method for establishing a fee, when, in the early stages of a project, final project scope and the full complement of services have not been determined.
Per diem or hourly rates are usually determined by the following:
1) a multiplier of direct personnel expense (payroll cost + payroll burden x a multiplier);
2) existing market conditions.
Lump Sum or Fixed Fee
To use the fixed fee basis, both the client and the architect must thoroughly understand and agree on all tasks required and on the project schedule. The method also requires calculating all costs and making a comparison with the two other methods of compensation.
With clear parameters, including a well-defined scope of services and construction estimate and project quality, the fixed fee can be a satisfactory approach for both the client and the architect. However, when unknown factors or an ill-defined project are involved, the fixed fee method can cause strained relationships and lead to substantial losses for the architect.
Request for Proposals
In seeking competitive submissions from architects, clients frequently use requests for qualifications (RFQs, especially on larger, complex projects such as public-private partnerships) or requests for proposals (RFPs) as a method of selecting architects.
The architect must clarify and understand thoroughly the client and project requirements and the level of professional services required before providing a fee proposal.
Request For Qualification (RFQ)
Requests for Qualifications (RFQs) are commonly used as a tool invite interested parties to submit a qualification statement that is used by the requester to evaluate and shortlist potential contractors, subcontractors, architects, and consultants for a construction project.
Request For Proposal (RFP)
A request for proposal (RFP) is a project announcement posted publicly by an organization indicating that bids for contractors to complete the project are sought. The RFP defines the project, for the company that issues it as well as the companies that respond to it.
Client-Architect Agreements
Regardless of the type of project, the architect should prepare and execute a written agreement with the client after identifying the full scope of services and negotiating a fee. Written agreements are a requirement in several jurisdictions.
