Working with an Architect

ARCHITECTURAL FEES

We get a lot of questions where architectural fees are concerned, obviously.  A very common question is, what do we charge per square foot?  This question can be very difficult to answer.  Bob Borson, a Registered Architect in Texas, answers these types of questions quite beautifully on his website, http://LifeofanArchitect.com.  He goes over many different ways a project can be approached from an architectural fees-standpoint and why the question is difficult – and we think his take mostly meets ours with perhaps a few variables, but you will get the idea.

Below is Bob Borson’s great viewpoint on the subject and the links to the two-part series can be found at the end.

The Fees

Determining architectural fees are a mystery to most, and that includes architects. As a group, architects are terrible at charging for professional services – as though it’s bad taste to send a bill to a client. In addition, architects are especially bad at keeping a handle on scope creep and recognizing when items should be billed as additional services. I attribute this to the fact that part of the by-product of designing a home for someone, you become very friendly with them and you don’t want to upset your new friend for additional fees because they wanted to change a door location during construction documents.

There are many different ways architects charge for their professional services:  hourly, percentage of construction, some combination of the two, a la carte based on specific phase of service (i.e., schematic design, design development, construction documentation, bidding and negotiation, and construction administration), or a cost per square foot of construction. To make things really interesting, a mixture of several of these fee structures could feasibly be combined. Everything clear so far? No? Good, keep reading, it gets worse.

In my office, we typically use either the hourly or percentage of construction methods. For us, this represents the most direct path for our clients in understanding our fees; but as straight forward as that seems, there are always complications and misunderstandings. I will clarify a few things that always seem to create problems and hopefully along the way, things will become less confusing.

Hourly

Just like it sounds – there will be an hourly chart for different level positions (administration, drafting, project architect, partner, etc.) and you are charged that rate for the time spent. The only time we use this format is when the scope of the work is not very comprehensive, unknown, or an existing client who prefers this method of billing. Generally speaking, most people don’t like being charged an hourly fee for fear of getting a surprise when the bill comes. As a result, when the work is charged hourly, we try and reduce concerns for the client by capping the amount or identifying financial milestones that indicate progress along the way. There are some significant advantages to selecting this as part of the billing method but it is when you have a combination of billing types within one contract ….

 

Percentage of Construction Costs

These percentages vary by firm but generally fall in the 8% to 15% range. This is our preferred method of determining our fee but one of the things that can always cause confusion is what exactly counts as part of the cost of construction. A good rule of thumb is to consider any scope where architectural coordination is required as part of the cost of construction. Seems pretty clear right? Well, we are just getting started; give me a chance to muddy the waters. We do not charge for coordinating other consultants’ scope of work, i.e., interior designers, landscape architects, pool design, exterior hardscape, etc., even though we spend a considerable amount of time and energy pulling their information into our documents and coordinating the design intent and construction requirements. We also do not charge for high cost specialty items (like chandeliers) because the cost of the fixture is irrelevant to the amount of effort we spent to make sure that a junction box is provided for in a specific location. It might as well be a surface-mounted fixture from Home Depot. However, this is not true when it comes to kitchen appliances even though on the surface, they may seem no different to you than my chandelier analogy. A considerable amount of time is spent detailing and reviewing the cabinetry that surrounds the appliances and the specific trim-out options and conditions they present. We also spend time selecting and presenting, or evaluating the appliance packages with clients, so there is coordination energy spent.

 

The Myth of Price Gouging

This is an understandable area of confusion and new clients routinely ask about the potential for us to increase our fees because we can specify expensive materials and drive the cost of construction up. There is an easy way for clients to quell these concerns; have a budget and tell your architect what it is up front. If we ever blow a stated budget when the construction bids come in, we will not charge the clients to redesign and redraw the project to get it back within the parameters established at the beginning. Where this area can get messy is when clients blow their own budgets, disregard our advice and continue moving forward with the documentation. I am constantly amazed at the successful and seemingly intelligent people who are surprised that the bid numbers are higher than the original budget when the house is 1,000 square feet larger than the original program. Did they think that there was a sale on square feet once you got over the 4,000? We might tell someone that the style and finish out of the house they want is tracking at $225 a square foot; therefore, if their budget is $1,000,000, that means approximately 4,450 square feet of house. When the program they present is 5,000 square feet (I bet you know what’s coming next don’t you?), they will be over budget. Seems pretty obvious doesn’t it? Apparently not.

 

Hourly Fees

I received some questions about hourly fees that I didn’t address the first time around so let’srevisit hourly fees – it’s just like it sounds. There will be an hourly chart for different level positions and you are charged that rate for the time spent.My office has set up hourly rates something along these lines:

Principal – $175 Project Architect/ Associate Principal – $115 Project Manager- $95 Intern Architect II – $85 Intern Architect I/ Drafting 1 – $65

The only time we use this format is when the scope of the work is unknown but anticipated to not be very comprehensive but it doesn’t always work out that way. Most people don’t like being charged hourly for fear of getting a surprise when the bill comes but this manner generally benefits people who know what they want and make quick decisions ….

 

Per-Square -Foot Fees

I find this method unreliable and unreasonable. There are too many moving parts to assign a per-square-foot fee value to designing and producing documents that could be used for bidding,permitting and construction. Since I mainly work on modern style projects, the amount of coordination I go through to detail a masonry building, sizing openings to align with the module of the selected masonry unit, water weeps, expansion joints,brick molds on windows, etc. versus the effort to work with a monolithic material like wood siding, or better yet, stucco. The amount of drawings required to properly coordinate one versus the other would not justify a single value cost. As a result, one of two things would most likely happen; since the fee would not be enough to compensate me for my time and overhead, either the quality of the drawings would diminish to reflect the fee, or I would be forced to work at a loss (which hopefully I would figure this out and either change my fees, cut corners, or go out of business). Everybody loses with this fee structure.

 

Combination Fee Structures

I have an old boss of mine that loves this particular structure. Basically, it’s a combination of the hourly and the per-square foot. The schematic and design development portions of the project are hourly. This gives an incentive to the client to be available, make efficient, timely, and decisivedecisions. It also protects the architect because regardless of the client, you know that you’re going to be compensated appropriately for your time. Someclients need to see iteration after iteration of possibilities, need a lot of counseling and reassurances, endless meetings, etc. and there’s no way to know beforehand.

When you move into construction documents, after having secured sign-offs on the designs along the way, the project has a more definable scope and a fee based per-square-foot cost can be used. Any changes to the design during the construction drawings’ phase needs to be identified as an additional service and the fee reverts to the hourly rate schedule.

Once you are out of construction documents, the fee goes back to an hourly rate during the construction administration portion of the project. This way, the architect can be as available as the client wishes during this time period for project meetings, site visits, installation coordinations, etc.

For me personally, I have a problem with the combination fee structure method because it rewards the incompetent architect for doing a bad job, because there is a lack of accountability. Let’s say the client gives good instructions, a clear program and an appropriate budget. If the architect doesn’t listen and has to produce multiple designs to get to where the client has asked, they get paid their hourly rate. Continuing along (and yet another reason this is a bad system), what happens if the architect prepares a poor set of construction drawings? They will be rewarded again at their hourly rate,for the extra on-site coordination, preparing additional construction documents “requested” by the contractor, and for checking shop drawings for design work they didn’t resolve during the initial construction document phase. This is one of those instances where the system works with a competent, ethical architect; but fails miserably when you get something or someone else. If you were the client, how would you know ahead of time which one you were working with?

Skin in the Game

I like tell clients that everyone needs to have skin in the game, that both architect and client are accountable to one another and while we both have something to gain, we both also have something to lose.

1.I am going to treat you fairly with my fees and you’re not going to waste my time.   2. I am going to make myself available to you and you’re going to make yourself available to me.   3. You will tell me your “real” budget and I will be accountable for designing a house that meets that budget.   4. If I design a house that comes in over your budget, I will revise the drawings at my cost.   5. If I tell you that you have changed the program and are at risk for exceeding your budget, and you ignore this advice, you should expect to pay me to revise the drawings.   6. If you tell most architects that your budget is $500,000, they will assume that this means your construction budget. Make sure that your budget includes monies for professional fees, landscaping and contingency.   7. Make sure that you have a conversation in the beginning what scope your stated budget will cover.

When everybody has something at stake in the process, and this should not be a surprise, the dialog is markedly improved; clearer goals are identified as a by-product of this process.

You can read his two-part series here:

https://www.lifeofanarchitect.com/architectural-fees-part-1/

https://www.lifeofanarchitect.com/architectural-fees-part-two/

If you’d like to hear more from Bob on the subject, he provides a little update on the subject of searching “How much does it cost to hire an Architect” on the internet and you can find his fine article here:

https://www.lifeofanarchitect.com/019-architectural-fees/