Architectural Fees and Phases of Work

Over the years, we have encountered potential clients who lack a reasonable expectation for the fees they may be asked to pay for the architectural services they request. What should a building owner expect to pay for the design of their project, and how does the architect add value to the project?

FEE STRUCTURES

There are many ways your architect can structure the fees they will charge, and one option is to set a percentage that is based on the construction budget. Other methods include charging an hourly rate, or setting a fixed fee at the outset. In general, fees when stated as a percentage of the total construction budget often work out to a range of 4% to 15%, depending on the complexity and type of the project.

Percentage

Calculating fees as a percentage of construction cost has a storied history with architects, partly because there is some protection for the designer in that, as the project scope grows or reduces, so does the fee. This fee variability can be considered as fair treatment to both entities. Building owners can evaluate their shifting budget knowing that the design fees will vary proportionally. A contract based on a percentage fee will clearly spell out how to determine an actual construction budget.

However, the amount of work the designer must do does not always scale proportionally to a final construction budget. Renovations, in particular, can reveal tricky conditions for which an architect must design, requiring custom solutions. These will need to be more thoroughly explained for the benefit of contractors who are not familiar with the proposed solution. Also, some architects may be wary of committing to design services for a more extensive project that later gets its budget reduced, after they have contributed so much effort. While the overall construction budget gets reduced, the architect may face an increased workload, and thus the contract for architectural services will include clauses to address such a situation.

A client may have concerns about a design feature that increases the budget, as it might be seen to be in the architect’s interest to specify more expensive materials and methods. While the designer’s motives might be concerned with quality, the alignment of interests may lead to some friction or at least suspicion on the part of a client.

Hourly Rate

Billing based on the actual hours that a firm works on the design has the advantage that it does scale directly with the project’s complexity and with the level of service that the client needs. The total fees charged this way usually end up in a similar range as typical percentages, but there can be variances where hourly billing could be either cheaper for the client, or more expensive.

For example, a new retail shell building that encloses a significant amount of square feet might have a substantial construction budget, yet require minimal architectural drawings since there are relatively few tricky details and the materials and methods are commonly understood by contractors. Building code and permit review issues are reduced, which may mean fewer drawings necessary to obtain permits. By charging only for the actual hours worked, such a project might end up with a very low equivalent percentage compared to the construction cost.

On the other hand, a renovation to an old building may call for much additional time, as the architect must investigate the conditions, come up with custom solutions, and possibly involve the services of engineering consultants such as a structural, mechanical, etc. to arrive at those solutions. For instance, setting a new beam to create an opening into an otherwise straightforward addition might call for extra hours of investigation, which is why renovations tend to run in the equivalent of 15% or more if expressed as a percentage of construction cost.

Fixed Fee

At the outset of the project, an architect can propose a fixed fee that will cover a defined project scope, and this fee will be based on an estimate of how much of their time they will expend to achieve that scope. An agreement for services based on a fixed fee must clearly delineate what services will be provided, as work beyond that scope may need to be billed hourly or per an addendum to that agreement that states an additional fee.

This approach places the onus on the architect to complete the drawings within the time budget that they have set for themselves, and this can be seen to be in the client’s interests. However, this may mean that the designer is incentivized not to offer custom solutions that would require a greater investment of time to develop. If the client does not have in mind a specific project scope at the outset, it will be difficult for the architect to estimate their time accurately, and so the architect might need to “quote high” to cover contingencies. Alternately, an agreement might only cover the first phase or two of design, anticipating an addendum or second agreement to move into later phases after the project scope has been more clearly defined.

Combinations

These methods can be combined so that the fairest method is used for each phase or portion of the work. An hourly rate, for instance, can be accompanied by a “not-to-exceed” fixed fee, to reassure the building owner with hard limits on their budget. As mentioned above, a fixed fee can be agreed upon for certain spelled-out portions of the design, with an hourly fee schedule for other portions. Later phases, such as bidding and construction administration, may rely on a percentage fee, while the earlier design work was done for a fixed or hourly fee.

In addition to billing for design services, an architect and client must consider fees for any consultants they hire (such as engineers) as well as reimbursable expenses such as printing and travel. These are usually passed along with some multiplier to account for reasonable profit and management time when managed by the architect.

PHASES OF DESIGN SERVICES

The amount of services that an architect will offer depends greatly on the kinds of drawings or other services that are needed, which differ for the various phases of a design project. A client should expect different deliverables from each phase of the work, and understand their purpose. Typical phases include Existing Conditions, Master Planning (or Programming), Schematic Design, Construction Documents, Bidding, and Construction Administration (or Construction Management).

Existing Conditions

To begin working on a design, the current building or site will need to be measured and drawn as it exists. Reliable baseline drawings will show both the designer and the contractor the factors that will constrain the new construction. The client should expect the architect (and/or a surveyor) to produce drawings that depict the starting conditions, at least in the areas affected by the proposed new work.

Depending on the project scope, greater attention may be paid to one portion of the building, where affected by new construction, and other parts can be ignored or shown with little detail. However, there may be reasons such as building code evaluation that call for the entire building or site to be measured and documented.

If the client can provide reasonably accurate drawings, such as from when the building was first built, then field measurement can be limited to just confirming certain critical areas on those drawings. Even so, it will take some amount of time to translate an old yellowed print into usable Computer-Aided Drafting (CAD) existing conditions. If the client has such drawings in a CAD format already, then time spent in this phase can be greatly reduced. Repeat clients can enjoy lower fees because of this, since the architect already has their building on file.

For site planning purposes, most projects will need a survey by a registered surveyor. The architect may recommend someone to perform this survey, but the building owner often will hire the surveyor directly. There are online tools such as municipality-based GIS (Geographic Information Systems) that can enable a project to move into Master Planning or Schematic Design phases, but the information available from GIS web sites can be unreliable or imprecise, and most jurisdictions and architects require the stamped survey as part of their Zoning or Building Permit review.

Master Planning / Programming

The goal of this phase is to produce document(s) that will guide future design decisions. Not all projects go through a distinct Master Planning phase, while sometimes an architect may be hired exclusively to provide a Master Plan.

Commonly, the term Master Plan tends to refer to planning out the use of land available and may show multiple buildings on one large site. Programming, on the other hand, tends to refer to planning the use of enclosed square footage within a given building. Both, however, are more diagrammatic in nature, serving to map spatial needs without assigning specific built forms to those spaces.

A Master Plan may also deal with time in that it creates a roadmap for multiple projects to occur in series (or Phases), so that a smaller initial project can be seen to fit into a planned eventual whole. Churches and businesses often request this service so that they can make wise decisions to add spaces to meet immediate needs while keeping in mind an overall vision of growth in 10 to 20 years.

A Program may take a written form, rather than a graphical one, as it lists the types of spaces that need to be provided, their sizes, and what other spaces they should be near. Some architects, though, will include some form of sketch or diagram to help communicate the program to the client.

Drawings produced for this phase might have spaces blocked out with enough accuracy to measure square footages, but they will not depict walls with real thicknesses or even show all doors and windows. The client should expect the design to evolve during the Schematic Design phase that follows.

Schematic Design

The primary purpose of this phase is to work out the form of the building to the client’s satisfaction. This means that drawings will depict just what is necessary to communicate the shape and feel of spaces, lacking the kinds of detail that a contractor would need to build it. Walls will need to be shown with their approximate thickness (there may be reasons later for a given wall to be constructed thicker, but that kind of detail would come during Construction Documents), and all major features like doors, windows, cabinets, etc. should be shown.

During this phase, a lot of design decisions must be made by the client, while the total project scope will still have a lot of unknowns. Once the client approves a set of Schematic Design drawings for further development, the architect will have a much more solid understanding of the scope and thus be better able to set fees. For this reason, hourly fees might be charged during the Schematic Design phase, while a fixed fee is proposed for Construction Documents. Larger projects, especially those that may require coordination with engineering consultants, may include a discrete “Design Development” phase that comes between Schematic Design sign-off and Construction Documents.

Construction Documents

With the Schematic Design affirmed by the client, the next step is to prepare drawings that are sufficient for a contractor to build the project. Most building departments also require submission of Construction Documents (CDs) for permit review. This means adding detailed information and specialized types of drawings. Often the preparation of CDs can take about twice the amount of time spent on Schematic Design.

The architect should have enough experience to know how much effort this will take, but when a client makes design changes during this phase it can extend the time required. The final deliverable of this phase is a set of drawings that might be revised later due to feedback received from bidding contractors as well as review comments from the building department; the agreement for services should clarify whether such revisions are included in the proposed fee structure.

The final Construction Documents represent an opportunity for the architect to inform the quality of the final construction. Childress & Cunningham Architects uses its experience with construction management to develop Construction Documents that favor cost-efficient design solutions.

Bidding

The architect may be hired to facilitate bidding, getting the Construction Documents into the hands of selected contractors and collecting their bids in a timely manner. A window of a few weeks is generally given to the bidding contractors, during which time some may have questions that require clarification or even revisions to the drawings. The architect will provide responses to those inquiries so that the bidders are working from the same information.

As the amount of the architect’s time required can vary greatly depending on bidder responsiveness, fees may be structured as hourly for this phase. The architect might also prepare their own Opinion of Probable Cost during this phase or before, to serve as a gauge against which to measure the received bids.

The architect can help with evaluation of contractor bids by discerning where some may be cutting corners or overlooking critical aspects. Subject to the client’s approval, the quality of a contractor’s bid may result in a recommendation for a bidder whose price is not the lowest.

Construction Administration or Construction Management

Time spent during this phase involves the architect’s monitoring of construction progress, stewarding the project to be built as intended, and serving as the client’s agent to review the quality of the contractor-delivered construction. Construction Administration sees the architect working alongside a selected general contractor, whereas Construction Management involves direct leading of a team of prime contractors (such as roofer, electrician, painter, etc.), each of whom has a direct contract with the owner.

Fees during this phase are more likely to take the form of a percentage basis, but with Construction Management the fee structure can be set up to incentivize project savings by granting the architect (as CM) a bonus for bringing the project in under-budget. Childress & Cunningham Architects has helped many clients to save on overall project costs in this way.

TYPICAL FEE RANGES

So how much does a client get for a given fee, whether that fee be a percentage of construction cost or not? The range of 9-10% for new construction, and 10-12% for renovation, as quoted in an article in the AIA’s Architect Magazine may be too simplified as a number. Presumably this fee range includes services from Existing Conditions through to Bidding, but this is not clearly stated. It should be noted that this article makes it clear that the AIA does not recommend fees for member architects.

Different projects may need to emphasize one phase out of proportion to others, such as needing extensive renderings and marketing graphics (usually produced during Schematic Design) in order to support a client’s funding campaign. Or a really old building might not have any reliable drawings to establish existing conditions, and require more thorough measurement as well as investigation to determine its structural suitability. Specifics like these should result from communication between you and your architect to understand the complexities of the project scope and how they may affect the fees.

Childress and Cunningham Architects strives to present clients with realistic fee proposals, based on our experience with similar projects. If you would like to read a few additional sources for fee ranges, consider the following links:

A study by the State of Michigan that analyzed actual fees charged.

An overview of fees by Houzz.

Summarizing information gleaned from architecturalfees.com.