no question about that

For many years I have only provided construction phase services of any kind on an hourly fee basis. My standard contract starts by declaring that I charge fixed fees for those elements I control (typically design, but not client-sponsored re-design) and hourly fees for those elements of the process that are controlled by others (typically construction). I make a point of explaining this to clients - it's a hard concept to argue with.

My standard contract then has wording that basically says "Here is my budget for the construction phase, and here's what it's based upon (typically a certain # site meetings, field reviews, an allowance for submittal review, changes to the work, mockups, completion services, etc.). Much of the construction phase is beyond my control, which is why I charge hourly..." and here is the kicker... "...if my services are used expeditiously by the client, contractor, other consultants and regulatory agencies, then my fees may be less than this budget. If they are used inefficiently, then my fees will be increased. Where it becomes apparent that my time is being abused, I will immediately advise [the client]."

This has worked very well for me - I used to always lose money in the construction phase - no longer. If construction is well managed, my fees are reduced, but since I am charging my usual hourly rate, I am covered, and I always seem to have other work to turn my mind to. On a handful of occasions I have advised my client in writing that I was going to exceed the budget against which I was charging hourly (but it's not an upset budget, remember) in approximately x months. They then talk with the contractor, with whom they have a contract. Usually the contractor becomes more reasonable and my services/fees are reigned in going forward. Occasionally the client comes back with something like "I've given the contractor a tight schedule, so just help him out and charge accordingly. And thanks for the heads up." Either way I am covered. And on those occasions when my fees come in under budget, the client is ecstatic.

Part and parcel of this approach: I track my time very carefully; I issue invoices for additional services separate from basic fees, so that any disputes do not delay payment of larger accounts; I issue expense invoices separate from main invoices for the same reason. The careful time tracking has given me a database over time that allows me to develop a fee proposal in a couple of hours from a standing start.

Needless to say my contract is not AIA or RAIC standard (I am Cdn), but it complies with whatever requirements they have. More to the point, my insurer and his lawyer, after reading my contract, confirmed not only that it met their requirements, but that it substantially reduced my liabilities as compared with standard contracts. I did lots of smaller projects, so might use my contract 20-30 times a year. Most years my contract wording might be challenged once, and I was so far to the good on liability exposure that I could give on language and still be better than most standard contracts.