PRM SEM 02 - 06. Fees Flashcards
Registered Architects Fees: Discounts and Bartering Services
It is common in some professions to make money on commissions or discounts. You might receive a commission or fee from a supplier for encouraging your client to buy or use their product. You might buy furniture at a trade discount, then sell it to a client at retail price.
A registered architect can not do this.
You can buy at a discount and pass that discount on.
You can not offer money, a service, a benefit, publicity etc to get a job.
Some architects may do a concept design for free or a lump sum to get the project going
or seize an opportunity. This is permissible.
You can accept a benefit instead of money from a client. And you can barter your services for
your client’s services or products or space in the future building but be aware that is still taxable!
The only way you can make money is from what the client pays (or gives) you.
The NZIA used to have a minimum scale of fees and charges, but not any more.
Fees: The NZIA Agreements for Architects Services
They cover fees but don’t set guidelines.
Section D: Scope of Fees and Payment of Fees has a table of fees broken down into
stages, a list of hourly rates and a table of expenses, all to be filled out as applicable.
A Guide to Fees:
The NZIA (NZ Institute of Architects) publishes a Guide to Architects Charges December 2006.
Again it is for members only but googling will find it posted on various architects’ websites.
This is very useful as it provides guidelines to establish fees.
Fees used to be set by the Institute and were not negotiable, however now you can make whatever deal you like with a client within ethical guidelines.
But you should be careful not to undercut others fees as you will be doing a disservice to
the profession and yourself in the long term. Indeed working at an extreme discount or for
free can be seen as an inducement.
You are better off arguing for good quality ideas and superior service than cutting your fees.
As the guide says “Architect’s fees are a relatively small part of the total life cycle cost of a
building project, yet an Architect can make a positive and substantial contribution to the
project in terms of cost effectiveness and overall value.”
If you are paid a fair fee you can afford to provide a better service.
Fees in General
Fees can be a lump sum, a percentage of total project cost or an hourly rate. It is not
uncommon to have all three on one job eg lump sum for concept design ($1000),
percentage for developed design and obtaining consents (10% of $100,000 budget) and
hourly rate for observation of construction or answering questions ($125 an hour).
NZIA Guide to Architects Charges December 2006 in Detail | 1.Introduction
“1) Introduction: It is most important for the success of any building project to agree in writing at the outset upon the scope of work and related budget, the scope of consultant services required, and the consequent scope of the fees. Such agreement should also outline mutual responsibilities and provisions for managing change.”
This is also required of any registered architect. See previous lecture.
NZIA Guide to Architects Charges December 2006 in Detail | 2. Complexity of Buildings
” 2) Complexity of Buildings: For the purposes of calculating fees for Architects’ core services, building types are classified according to complexity” from Class 1 (low) to Class 5 (high)
NZIA Guide to Architects Charges December 2006 in Detail | 3. Building Classifications
“3) Building Classifications:” Buildings are classified according to type with the complexity
rating next to them:
Note that house alterations are Class 5: complex in envelope, plan, services, brief and
intensive or continuous client contact. Warehouses and shell structures {eg garages) are
Class 2 or 1: simple in envelope, plan, services, brief and minimal client contact.
NZIA Guide to Architects Charges December 2006 in Detail | 4.Specialist and Supplementary Services
“4) Specialist and Supplementary Services: The Architect may offer specialist services or engage sub consultants to complement the core Architects’ services where required.
Fees for such services will generally be calculated separately.” Specialist and consultant services are listed here eg project management, engineering, landscape design etc
NZIA Guide to Architects Charges December 2006 in Detail | 5. Calculation of Fees
5) Calculation of Fees:
a) Architects’ fees for providing agreed services may be calculated on Lump Sum, Time
Charge. or Percentage Fee bases. or a combination of these appropriate to the nature
or stage of the services agreed.”
NZIA Guide to Architects Charges December 2006 in Detail | 5(b) Lump Sum Fees
“b) Lump Sum Fees are determined by pre-estimating and agreeing the cost of resources necessary for the proper execution of each section of the Architect’s services. Lump Sum fees are difficult to establish at the beginning of a project unless there is a clear and precise understanding of the Client’s requirements. It may be realistic to use this form of fee structure only once the design has been developed and agreed, e.g. after sketch plans have been completed.”
NZIA Guide to Architects Charges December 2006 in Detail | 5(c) Time Charge Fees
“c) Time Charge Fees are generally charged where the extent of the services cannot be readily determined beforehand. Such fees are calculated by multiplying the hours of service provided by the agreed hourly time charge … expenses are added.
At the outset the Architect should provide an estimate of the total cost. ..
The Architect must keep full records of time spent on agreed services … “
Time charge fees are also called “hourly rate” or “charge up”.
Hourly rates vary with expertise and experience. An experienced architect’s hourly rate is much more than eg an office junior.
NZIA Practice Note PN3.201R Control of Time and Costs advises how you calculate your hourly rate based on the effective hours you work, your office overheads etc.
Many architects just ask their peers what they charge an hour!
NZIA Guide to Architects Charges December 2006 in Detail | 5(d) Percentage Fees
“d) Percentage Fees are calculated by multiplying the adjusted Cost of the Contract Works by the percentage fee rate agreed … [adjusted means the cost of everything designed, selected or laid out by architect and consultants … If the final Cost of the Contract Works has not yet been determined, the most recent estimate is used].”
(is the fee based on the Tender Price or the Cost of Contract works at the end of the project?)
From the last line it seems that payment claims will use the adjusted estimate (incl variations etc?)
Many architects charge 10% - 12.5% but note that some star architects may well charge 15% or even 20%! Or the client may drive the fee down to 5 - 7%
In practice percentage fees drop as job value increases - see later.
NZIA Guide to Architects Charges December 2006 in Detail | 5(e) NZIA Architect members are ethically required…
NZIA Architect members are ethically required to offer and provide services within their areas of current competence, and to advise wherever consultants with specialist skills are required. Fees for such consultants may be paid by the Architect [subconsultants], or directly by the Client [separate consultants]. Either way the Architect will be responsible to coordinate their input.”
NZIA Guide to Architects Charges December 2006 in Detail | 5(f) The Architect may bear costs…Disbursements
“f) The Architect may bear costs beyond those allowed for in the agreed fees, such as payment of statutory charges, reproduction of documents, travel expenses, communication costs, and special presentations [disbursements].
Rates for reimbursement of costs … should be agreed at the same time as the fees for
services are confirmed.”
NZIA Guide to Architects Charges December 2006 in Detail | 5(g) Client Adjusting Scope
“g) In circumstances where the Client instructs significant changes to the scope of the project, or the Client requires the Architect to accelerate, delay or extend the agreed services, the Architect will be entitled to adjust the agreed fees accordingly.”
