Architectural Fees for Residential Projects

Bob Borson —  March 20, 2013 — 115 Comments

. For someone who doesn’t actually handle any of the billing in the office, I spend a lot of time thinking about billing.

money

I have written two previous posts on the subject of architectural fees: Architectural Fees- Part One:  this posts talks about the different ways architects can develop their fees (hourly, percentage of construction costs, etc.) Architectural Fees – Part Two:  this posts elaborates a bit more on Part One (more on hourly rates, per square foot fees, and combination fee structures) but I introduce the concept of “Skin in the Game.” I like to 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. That’s what I was thinking about as I sat down to flesh out this post. Alternate ways of setting up a fee structure that helps the client feel like they have more control over the architectural fees that could be generated while giving the architect the opportunity to plan for and cover their expenses for the services they are providing. One of the issues that we come up against all the time is that during the interview process, most clients have just a few things to base their selection criteria – design style, personality, and professional fees. More times than not, we don’t struggle with the design style and personality portions, people are generally familiar with our design style and as an office, we are a fairly likable bunch. That just leaves the last bit – the architectural fees. In our office, almost all of our contracts are based on a percentage of construction costs. Most architectural firms who subscribe to this way of determining their professional services fee fall into the 8% to 15% range. This means on a $100,000 dollar construction cost project, the architectural fees would fall in the range of $8,000 to $15,000 range – pretty simple really but one of the things that can always cause confusion is what exactly counts as part of the cost of construction. The other issue is the level of service that Firm ‘A’ at 8% charges and the level of service that Firm ‘B’ at 15% charges … and for these new potential clients, they can’t always tell (or even understand) why they would hire Firm ‘B’ when they like Firm ‘A’ and they are so much cheaper!?! Since I am more of a Firm ‘B’ service provider (and our professional fees reflect that) we lose out on a number of project to less costly architectural firms. This drives me crazy for the simple reason that the additional services I generally provide are worth far more than the delta of fees between the two firms might suggest. That’s where my idea of skin in the game is evolving. What I have been thinking about is how I can create a menu of services that allows the potential new client to more readily recognize the value of the service they are receiving. If I am going to provide less service, then my fee should reflect that right? The problem with this model is that most people think they don’t want these “extra” services but in the end, almost always see their value … but at this point, it’s too late and some other firm is working on their project. So by creating a menu of services, we can get down to a more competitive fee – again, seems pretty straight-forward to me.

. Roll of architectural drawings

One of the projects I have been highlighting here on the blog is the Cottonwood Modern house and pool pavilion. These clients signed up for full services and I’d like to say that they are pretty happy with their decision. The drawings package we prepared for them was significant – I get asked some times about our drawings and what sort of effort do we put in to document these sorts of projects. To say “a lot” probably isn’t a very satisfying answer. On this particular project, here is some of the metrics on what the construction drawings package included:

  • 53 – pages of construction drawings at 30″ x 42″ sheets – the breakdown = 31 architectural, 14 structural, 4 landscape, 4 lighting design. That’s 463.75 square feet of drawings or 61.83 yards if the sheets were laid end to end
  • 62 – interior and exterior doors
  • 34 – window types
  • 19 – wall sections
  • 71 – door and window details
  • 105 – interior elevations
  • 14 – exterior elevations
  • 299 – individual architectural drawings
  • unknown – sodas and cups of coffee consumed during the drawing of these documents

There are about 95% more drawings here than are necessary to secure a permit for construction. It is a complicated house but we probably didn’t need to draw 71 door and window details – but we did because it produced a more thorough set of drawings, enabled more accurate pricing, and has led to far fewer construction related issues in the field. But not all clients want to pay for all this additional service … what to do? The idea is that for an architectural fee totaling 8% of the construction cost, you get a standard set of drawings: plans, exterior elevations, door and window schedule  – basic stuff. If you want interior elevations, millwork details, that will be an additional 1.5%. Coordinate interior finishes? Sure, that will be 2% … I think you get the picture. The client comes in for the interview, understands that our fees are competitive with everyone else, thinks that they don’t need these additional services, and we get the project. As the project goes on, they learn more about the process, come to understand and value our input and guidance, and start to select some of the additional services items because … well, because they have real value to them. The flip side to this is that is the client chose to retain our services up front for these “additional” items, the percentages associated would be reduced. Like I said in the beginning, I don’t have anything to do with billing in our office – that task is relegated to those whose names are on the door. I know I don’t have the kinks worked out – I’ve only just started to identify the kinks. One really apparent one is “Construction Observation” which we make a requirement on all our projects. We will occasionally get potential clients ask to have this portion of scope removed from our basic services but we always say no. I have all sorts of reasons why this is the worst area to remove your architect but that’s a different post on a different day. I would be curious to know if any of the readers here either have a menu of services contract like I describe in place for residential projects or if you are a a client who has worked with an architect who had a contract like this in place. What are your thoughts? Thanks. . .

even better

  • Jake

    I wanted to mention a few points here for everyone’s consideration….. We have a small (7 people) residential design firm and do roughly 20-30 houses per year. We created our own contract. The contract is broken into phases. Each phase has a fixed fee and a clearly defined list of deliverables. We provide our clients with a menu of services from which we create our contract. Each service produces a work product of some sort (i.e.; site visit, 3d site model, site sketch, etc.). Some services/products/deliverables are mandatory (floor plan), others are optional (lighting design). The entire contract is a fixed fee and each phase has a fixed fee. We can do this because I know exactly what resources we need to allocate to create each work product AND because the description of the work product is clear and finite. This system works really well. The clients know exactly what they get and exactly what they are paying. Plus we know exactly what we have to do. It’s not complicated.

    • http://www.lifeofanarchitect.com Bob Borson

      This is a system that I have been advocating for a while – glad to hear that you are having success with it. In my office now, we charge hourly for residential work and even though I was expecting a some push back from potential clients, the reaction has been just the opposite. Most of our clients are in the professional services industry (doctors, lawyers, etc.) and they seem to understand the concept that you are paying for time rather than a deliverable. Some clients want to minimize their role in the design process and some seem to live for the experience. Both have the same deliverables, but the experience is somewhat different.

  • Jane

    Hi Bob,

    I have a question I’m trying to get help with. We hired an architect with an hourly rate that caps out at 12% of our construction cost. As the plans have progressed my relationship with the architect has deteriorated. It takes 4-5 emails for him to make changes I request meanwhile our billings and my anxiety increase with each change so that I’ve stopped asking for them. I am tired of having to pay to be ridiculed for my ideas. Meanwhile the architect has added many features and designs we never asked for such as an outdoor BBQ and extensive tiling in bathrooms and laundry. I’ve been reading through our contract because I’m so overwhelmed with what to do and was figuring I’d make all the necessary corrections and remove the architect’s extras with the contractor. Well it seems I can’t do this without the architects approval AND his capped percentage fee agreement is based on the estimate of work not what we actually construct. So we paid this guy to design work we didn’t ask for and when we take it out of the plans – again paying him to revise back to what we can afford – we may still owe him more than the 12% of our original budget. This seems highly unethical. Is it legal? What do I do about it? Thanks for any advice.

    • Jane

      Also, if we end our contract with him can we use the plans as they were meant for?

      • Paul Scharnett

        I can actually comment on that, as a future architect.

        A couple of things:
        Depending upon your contract, you have certain rights that are enumerated. Most architectural firms use the AIA standard agreements, which are largely beneficial to both parties. If the architect is going well beyond the original scope and you disagree, you probably have approval rights to the final project.
        Regarding the plans, they are technically the architect’s property, as an architect retains all copyright on a project unless it was specifically transferred in writing to the Owner or other entity. You are not allowed to use his plans without his permission, as they are a product of his services.

        In your situation, I would suggest three things:
        1. Architects are generally pretty reasonable. I can’t speak to this particular person, but architects are trusted with huge projects for a reason. There is likely a misunderstanding or miscommunication about design intent or something somewhere that has precipitated your situation. You should try to reason with him first.
        2. If it were my project, I would recognize that even if the architect does all of this extraneous work, what eventually gets built and approved is indeed your choice. If it is a percentage fee or lump sum, this extraneous work really won’t cost anything if you cut the extra work out of the project.

        Best of luck,
        Paul

        • Jane

          Thanks so much Paul. I appreciate your response. The problem is my experience this far with this architect has led me to feel he is unreasonable. I would like to use our finished plans from him and work solely with the contractor at this point. I’ve reached my architectural budget and I don’t need his help except for making the necessary changes that were asked for in plan check.

          This architect insists he needs to be a part of the construction phase and says our contract stipulates that. It also says I can end our agreement with seven days notice and that we can use the plans for the property they were designed for. I’m not sure if I should terminate the agreement and move forward with the contractor or tell the architect my feelings.

          Thanks.

          • http://www.lifeofanarchitect.com Bob Borson

            Hi Jane – sorry to be silent, I thought Paul provided an excellent response to your initial question. At this point, I think for all parties concerned, you should convey your feeling to your architect – how he responds should be a pretty good indicator of how you should move forward.

          • Jane

            Thanks Bob. My previous “talks” with the architect on his disrespectful and confrontational language and style haven’t produced the changes I was hoping for. At this point I need to part ways with this “bully” but am holding out for my RTI. I really appreciate the help this forum has provided.
            Jane

          • anonyms

            I came across this QA thread during research I’m doing right now on Architects pay rates and compensation. As of this date (Oct. 2014), law has changed in California and one cannot use drawings or plans developed by an architect without the architect’s expressed written permission or release. Myself hopefully in the end stages of dispute I have had with an architect (I paid $xxxxx for design to approved construction drawings for a home with remodel budget of $yyyyyy. I created design and preliminary sketches for home with remodel budget of $100k more). Some important points for you to consider: if you signed a contract stating you can end agreement with 7 days notice, you can do so, period. Again, keep “feelings” out of it. Even if you do this, at this point in time in California, you will still need a written release/permission to use the architect’s plans/drawings. The architect can insist from here to eternity that he “must do… [insert name of whatever he is trying to get you to let him do]…” but UNLESS THE CONTRACT REFLECTS THAT REQUIREMENT (unless the contract says ‘…architect MUST bla bla bla…’), the architect just ‘gets’ the ‘right’ to feel disappointed s/he didn’t get what s/he wanted, period.

          • Jane

            Thanks! I spoke with an attorney and the contract is simple and clear I guess. I need to give him the seven days notice but I can use the plans for the property. If it states this in the contract this counts as “permission”, correct?

          • Jane

            I still need the RTI on the plans though. Do you know if he is the only one who can get this?