Professional Business Practices 10% (Project Budgeting and Practices)

Question 1

When estimating fees for a firm the key term to remember is what?

Answer 1

Utilization Rate

UR

Question 2

What is Utilization Rate?

Answer 2

Determine how much of the total work hours of an employee represent billable hours

Question 3

What are the 2 ways to calculate UR?

Answer 3

• UR = BILLABLE HOURS / TOTAL HOURS over a particular time period
• UR = BILLABLE HOURS / FIXED HOURS per WEEK

Question 4

When calculating how much to bill for employee’s billable hours, this is what should be taken into account?

Answer 4

• Direct Salary Expense
• Direct Personnel Expense

Question 5

Fixed Professional Fee plus Expenses

Answer 5

Design services are separated from other services with identified costs such as costs for reimbursable, payment to consultants, etc

Question 6

Hourly Billing Rate

Answer 6

Project is billed using a the standard schedule of rates or hourly rate for every hour logged.

Often it contains a “not to exceed” clause

Question 7

Lump Sum

Answer 7

A specific amount is agreed upon for the total payment of services required in the scope of work

This fee cannot increase unless mutually agreed.

Question 8

Percentage of the cost of work

Answer 8

Based on a percentage of construction cost or the architect’s budget -varies per client or project

Question 9

Area Fee (SF pricing)

Answer 9

Typical of commercial projects and it’s based on the total square footage multiplied by a set amount or rate

Question 10

Retail method

Answer 10

he designer is compensated by charging a markup on the furniture and furnishings that the designer sells the client

This is discouraged as a method of payment for professional services

Question 11

It is good practice to add a fixed percentage of contingency, what is that percentage?

Answer 11

5-10%