CLIENT ARCHITECT AGREEMENT & FEES

Question 1

Reasons Architects Should Avoid Warranting “Fit for Purpose”

Answer 1

• Uninsurable Promise

Warranties for “fit for purpose” are typically not insurable.

• Consumer Law Exclusions:

Implied warranties for fitness of purpose under consumer law do not apply to architects and engineers.

• Prototype Nature:

Architectural projects involve uncontrollable variables like changing user requirements, building tolerances, conflicting briefs, and future regulatory changes.

Question 2

When is stating “Fit for Purpose” required and insurable?

Answer 2

When specifying building products

Question 3

What is the key requirement for a contract to be legally binding?

Answer 3

Consideration (a mutual exchange of value of any kind)

Question 4

Is a verbal contract legally binding?

Answer 4

Yes but it is hard to enforce and is unlikely to be insured.

Question 5

Risks and Key Considerations for Offering Partial Services

Answer 5

• Define Scope: Clearly outline the scope of services provided.
• Appropriate Documentation: Ensure documentation aligns with the procurement method.
• Insurance Coverage: Verify that insurance covers the partial services offered.
• Site Visits: Be cautious; site visits can expose full liability if not properly addressed in the contract.
• More risk = more fees

Question 6

Clauses and Disclaimers for Student/Grad Commissions

Answer 6

• Lack of Registration Disclaimer: Specify that the student/graduate is not registered or licensed.
• Limitation of Liability Clause: Limit the extent of liability for the services provided.
• Authority Confirmation: Confirm authority to prepare drawings for planning/permit purposes, noting that insurance and registration may be required in some states.

Question 7

Liability for Graduate/Student Design Work

Answer 7

Liability assessed based on a reasonable level of skill commensurate with their experience.

Question 8

In what scenario is a unpaid competition approriate?

Answer 8

When there is a reasonable brief & transparent guidelines and expectations. Design focused and publicly significant projects are most suited.

Question 9

Valid reasons for an Architect to Resign in the CAA2019 without 30 days notice.

Answer 9

• Client non-payment
• Client refusal to provide required information
• Client refusal to engage consultants
• Inability to agree on change of scope
• Inability to agree on change of program

Question 10

What is the process for resignation under the CAA2019

Answer 10

1). Ensure you have not breached contract
2). Issue invoice for all services complete to date
3). Provide resignation letter

Question 11

Correct Course of Action for Late or Non-Payment (CAA2019)

Answer 11

• Notify
• Claim Interest on Overdue Payments after 10 days (Overdue)
• Suspend Works & claim costs associated with suspension and/or resumption
• Temporary Revocation of copyright license
• Enact Security of Payments Act
• Seek Legal Advice & Advise Insurer

Question 12

Total Cost of Works

Answer 12

Cost of Works + ALL other costs to the client associated with the project

Inc. authorities, design fees, consultants, removal, relocation, contingency, etc…

Question 13

Cost of Works

Answer 13

• Cost of all work designed, specified & scheduled by architect.
• Excluding GST
• IE. final contract price + client supplied items

Question 14

Key Considerations in filling out a CAA for Pro-Bono or Reduced Fee Work

Answer 14

• Make scope/fees/limitations clear in schedules.
• Do not engage consultants
• Use special conditions to limit free hours

Question 15

Variables to Adjust to Account for Lowered Fees

Answer 15

• Reduce scope of services
• Clearly define limitations to scope of services (Time caps or revision caps)

Question 16

Components of Overheads (Architecture Firm)

Answer 16

• Labor costs for non-project hours
• Fixed costs (leasing, insurance, registration, etc…)
• Variable Costs (entertainment, office supplies, travel, etc…)

Question 17

Total Annual Cost Components (Architecture Firm)

Answer 17

Overheads + Project Labor Costs

Question 18

Charge Out Rate Calculation

Answer 18

(Hourly Team Member Salary) x (Overhead Factor) x (Profit Percentage)

Question 19

Profit

Answer 19

Income (Revenue) - Expenses

Question 20

CAA2019 A2.7

The client indemnifies the architect from claims related to:

(A2.1 - A2.6)

Answer 20

The client indemnifies the architect from claims related to:

1). Construction as per contract documents (except during contract administration, where the architect must instruct the contractor of requirements of contract documents)

2). Fit for Purpose

3). Weathering of Natural Materials

4). Asbestos &
Hazardous Materials

5). Ongoing Maintenance

6). Client-Supplied Items

Question 21

Main Client Obligations under CAA2019

Answer 21

• Issue instructions to the builder through the architect during contract administration.
• Site Access: Comply with reasonable site access requirements.
• Information: Provide all required information.
• Engage and pay consultants as required
• Offer cooperation and prompt approvals.
• Photographs: Allow the architect to photograph and publicize the work.
• Attribution: Attribute the architect as specified.

Question 22

Standard Components of Architect’s Fees under CAA2019

Answer 22

1). Fee: Percentage, lump sum, or hourly rate.

2). Adjustments: Changes due to scope or cost of works.

3). Disbursements: Reimbursable expenses.

Question 23

Are clients ever entitled to recovered fees?

Answer 23

No

Question 24

Legal Action Under CAA2019.
Before taking legal action, either party must:

Answer 24

Follow the Dispute Resolution Process: Adhere to specified timeframes, notices, and mediation attempts.

Question 25

What is a Disbursement?

Answer 25

Definition: Reimbursable cost for items like authority fees, materials, travel, printing, etc.

Admin Fee: Includes a 15% administrative fee if applicable.

Question 26

In what scenario does a revised brief trigger a variation or adjustment to fees?

Answer 26

When there are implications to scope of services or program of works