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Help needed figuring out fee

Dec 13 '12 17 Last Comment
Jefferson
Dec 13, 12 10:07 am

I've been asked by an old client (community college) to draw all their buildings into CAD, from hard copy working drawings done before CAD (arch drawings only, no structure, MEP).  There are probably 10-15 buildings and many are vastly different in size.   I'm trying to figure out what to charge per hour, or to establish a fixed price based on estimated time to do the whole project or different pieces of the project (ie. each building).  It's pretty tough to estimate though and I don't want to screw myself.    Can anyone advise on this?  I'd be very appreciative.  I'm a licensed architect with 13 years experience if that matters.

 

FRaC
Dec 13, 12 10:37 am

what level of detail do they want?  is it just walls, doors, windows or do they want the cad to look like the original drawings with all dims, notes, or is it somewhere in between?

you should probably be able to draw 1 floor of an average classroom building (2500 s.f.?) in about 2-4 hours but who knows?  there are your cad skills, the complexity of the building, the level of detail required - all sorts of variables to consider.

just estimate your time and add about 10-20% to that time because it always takes longer to do than you think.

curtkram
Dec 13, 12 10:50 am

are you visiting the buildings in real life to see if they still match the original documents?  that makes it take much longer, but tends to provide better results.  i don't see drawing a floor in 2 hours as being reasonable unless it's really straight-forward and simple.  maybe 4.  When you get the original documents, there is a fair chance a lot of it will be unreadable, dimension strings that don't add up, and the drawing possibly not being to scale.  they just did things different back then ;)

wurdan freo
Dec 13, 12 10:54 am

Licensed architect and 13 years experience and you don't know how to put together a bid? No wonder...

http://education.yahoo.net/articles/degrees_to_avoid2.htm?kid=1NQM0

From the sounds of it, this is about the easiest job there is. Maybe getting paid to pick up redlines is easier, but this is close.

L+M+O+P=C

Labor plus materials plus overhead plus profit = cost  

That simple. Now you just have to define what each of those mean to you. 

I would also second what FRaC said. Scope seems vague. Make sure you know what they want so you don't "screw" yourself.

snook_dude
Dec 13, 12 11:27 am

I have done a lot of this work over the years  on University Buildings.  What I did find is the drawings are vague and changes to the building  are s hardly ever recorded.  The other thing if it is in an urban situation don't figure on buildings being square.  Not long ago I worked on a building where one wall was established by the street property line.  It was a night mare to measure because every wall seemed to be in flux.  If I were you figure your going to have to print every document you get, then head out to the field and identify areas of the building which don't match what is on the drawing.  See if there is an understandable grid for laying out the structure and then check to see if  it corresponds with the drawings you were given. Sometimes these things change for one reason or another, in the shop drawing phase,  The end result is if you layout the new drawings to the drawings provided you and then you start measuring you might find columns floating out in middle of rooms.  I always use a standard format of information on my drawings to identify specific items I want to account for such as ceiling height and type, Window Sill Height , Window Height.....on and on.  As many years at doing this I find their is often a need to return to the site to verify something that you forgot to measure for one reason or another.  Usually being distracted by a young Lovely....or a cranky old professor who doesn't want you in their office.

Oh ya we  are often given master keys from the University which are to be returned by the end of the day.  Otherwise your required to provide re-keying of a building, which can be a heavy hit.  We did have an engineer once manage to forget to return keys  before the end of the day....and well the shit really flew.

We were usually given keys to only the building we were working on. The University took it upon themselves to alert all deans and heads of department so they could alert the professors we were in the building.    We were to always knock on locked doors and wait one minute before  knocking again. If no one answered the door within the next minute we were to let ourselves in.  It was amazing how often it would happen the room was occupied, and we would give them the standard voice over about what we were doing and how they were to have been contacted by their department head and if they would like to call the department head it was not a problem for us, as we were working for the University.

J. James R.J. James R.
Dec 13, 12 12:15 pm

Take your rent or housing cost.

Multiply it by 4.

Multiply that by 12.

Multiply that by 3.

Divide by 2080.

That is your hourly rate.

 

For instance, your rent is $1,100.

Your gross monthly income should be $4,400.

Your gross personal income should be $52,800.

Your company's gross revenue should be $158,400.

Your hourly billing rate is $76.15 per hour.

Dec 13, 12 1:09 pm

The one thing about architecture is that you can always spend more time on drawings.  So I would definitely estimate as high as possible.  For example, if you think something will take an hour, then propose that it will take two hours.

Also, as other have noted, field visits can take a ton of time.  Maybe the school has other plans and only needs you to convert the old paper drawings into electronic files, but I would offer to do that as one project and then suggest a second phase of as-built drawings.  If you propose it as two projects, you might be able to double your profit.   Now, the school might propose that you bundle this all into one fee and to avoid that, you might want to play a bit dumb at first and just take it one step at a time.  That is, wait until after you've started the first part (transfer paper drawings directly to electronic with no site visits) before suggesting a second part (where you 1-conduct a site visit to search for anomalies and 2-offer to then provide updated as-built drawings).

Those are my thoughts.  You might be able to gain a nice profit out of this work, but it's really up to you to assess the situation and recognize how much blood you can squeeze from this rock.  As they say on Wall Street, greed is good.

Yo!

gwharton
Dec 13, 12 1:49 pm

If you're trying to figure out what your fee should be on the basis of your estimated cost structure plus a profit, then U R DOING IT WRONG.

You're fee should be what the client will pay in proportion to the value you are providing. Your cost to accomplish that work is entirely irrelevant to the fee amount. The only way it's important is how much profit you will have when you've done all the work and collected the fee.

If you do your pricing based on cost plus profit, then you will always be in a situation where one of two things will be happening: you will be undercharging for what your client is willing to pay for the value you are providing and thus leaving money on the table (giving value away for nothing), or you will be overcharging for something somebody else can do more efficiently or which your client does not value as highly as your cost structure would indicate. Either way, your pricing policy is going to cost you. Maybe a lot.

Rather, figure out what you're providing in terms of service and deliverables, estimate what value that has to your client. That amount (or a bit less) is your price. Then you figure out if you can do the work at that price and make a profit. If it's close, then you need to be very careful about managing your cost structure and work for profitability and efficiency.

This should be your mantra in all things related to fee: Price on value; Manage on cost.

curtkram
Dec 13, 12 1:57 pm

gwharton, if you're right, shouldn't you be able to provide jefferson with a number he can pass on to his client?  I would like to know what the actual value of his service is too.

Jefferson
Dec 13, 12 4:08 pm

"Licensed architect and 13 years experience and you don't know how to put together a bid? No wonder..."    I certainly do know how, but wanted other people's opinions on the matter jerky                                                                                                                                      Thank you to the rest of you helpful people

gwharton
Dec 13, 12 4:23 pm

I don't know who his client is, what they need his services for, or anything else that indicates the value of what he intends to provide them. They're his clients. He should know that himself. If not, he should spend some serious time talking to them about it.

gwharton
Dec 13, 12 4:43 pm

As an example of what I'm talking about vis a vis value pricing, I used to do a lot of feasibility studies and did quite well at pricing them to value rather than cost.

A good feasibility study, and by this I mean one that has really been researched and thought through (and which the creator of it stands behind for validity), has a high value to many types of property developers, both public and private. It becomes a validation of assumptions, statement of conceptual scope, basis for marketing and financing, benchmark for risk mitigation, essential sales tool at project start up, and core piece of due diligence for a project. A good one is worth a substantial fraction of the value the ideas and analysis provided therein adds to the project.

Knowing enough about my clients' business models, and how much they would typically gain in project value based on the information, analysis, and conceptual directions I gave them in the feasibility package, I priced them accordingly.

Now, most architects look at feasibility studies as a kind of marketing and charge very little for them (on the order of $1,000 to $2,000 for a quick-and-dirty, back-of-the-envelope kind of study with a sketch or two and a few numbers scrawled in a margin). Unfortunately, that means they can't afford to put a lot of effort into doing them right, and experienced developers have been burned many times by architects who do these on the cheap and then won't stand behind them later when the assumptions they made don't really pan out. Since developers are staking a lot on the outcome of the feasibility study, they weren't getting the value they needed.

So I would charge ten to fifty times that much for a feasibility study. And they would happily pay it because I understood the value they needed and gave it to them, complete with an assurance that we stood behind it completely in case something we told them should be incorrect. It didn't take long to develop a log of feasibility work that clearly demonstrated the value on real projects, along with great stories: "How much would you pay to make a net profit of $1 million in three months?" That sort of thing.

After the first one or two, a new client would stop hassling me about how much higher my price was than all the other architects who would do it for a pittance. I had no problem with that line of questioning, though, and would always encourage them to go try the competition and their low, low prices. Some even did. They always came back.

How much effort and cost was involved in doing these? We had developed a system and approach that let us do them very efficiently. When we were just starting out, it would take a team of three people three weeks. Six months into it, we had enough of a template and system that one person could do a full feasibility study on a significant project in two weeks, and a standard project in one week. Half time.

So the profit margins were huge, and kept getting bigger as we got better and more efficient at it. And as we got better and could provide more value, we could charge more. Profit margins of several hundred percent over our cost were pretty common. In fact, the only reason I don't do much of that sort of work any more is that my clients have other needs now. So I've adapted and provide different value to the market. That's how you get pricing power and develop profitable business.

And that's what I mean by "Price on value; Manage on cost."

snook_dude
Dec 13, 12 6:58 pm

You can also do it on a square foot basis.....say $2.00 a sf.  The number isn't so scary when you thow it out there that way.  I do have a friend who does just than and I don't think he gets burned.  So a  1,000 square foot building is $2,000.00.  $10,000 Square foot building is $20,000.

Lots of Luck.....There are survey instruments which  are wonderful instruments to use if you have the knowledge base. Otherwise your tossing your money away unless you hire a young gun surveyor who understands the equipment.

el jeffe
Dec 14, 12 9:34 am

"...complete with an assurance that we stood behind it completely in case something we told them should be incorrect."

gwharton - what precisely would that mean to your client?

gwharton
Dec 14, 12 3:26 pm

One of the biggest parts of the real estate development game is dealing with risk: mitigating it, pricing it, transferring it, insuring it, etc. The vast majority of transactions that occur in the financial world are related to this issue of risk in some way. Most architects don't really understand how risk-focused their clients are, nor how much risk a developer takes on when they base their project business plan on some idea that an architect sketched on the back of a napkin. Real estate projects are capital intensive, illiquid, risky, and involve significant time lag between conception and completion.

RE people are used to talking and thinking in terms of risk transfer and pricing. If anyone assumes a risk, the assumption is that they will want to be paid for doing so. A big reason that architects have a poor reputation for business acumen among our clients is that we often assume risks without getting paid for it, but are otherwise pathologically risk averse. If that seems paradoxical, consider that any time you render a professional opinion on a code issue to a client, you are accepting responsibility and liability for what happens if you're wrong. The information has value, but just as valuable (or more so) is that you have assumed ownership of the risk to the project embodied by accepting responsibility for that information being correct. Ideally, you have been paid for doing that. In practice, most architects don't insist on that much.

On the other hand, architects in general and the AIA in particular have spent the last several decades trying to create contractual agreements and professional practices that isolate and insulate architects from as much risk as possible. Thus, we do all this stuff that is essential to the creation of the project, but cross ourselves in fear at the idea that anybody might hold us directly responsible if it doesn't work out (and I'm not talking about errors & omissions or life safety stuff here). Architects commonly through out conceptual feasibility diagrams for projects to try and get clients on the hook for hiring us to do full design, but don't realize that those quick ideas have huge meaning and importance to our clients. They enter into multi-million dollar agreements on the basis of that stuff. If it turns out later that the initial assumptions weren't correct or the concept somehow isn't going to work as originally thought, we absolve ourselves of responsibility and our clients are left holding the bag.

Let me just say here that they REALLY HATE THAT. A big part of why many of our clients are deeply ambivalent about dealing with architects is related to this one issue.

The thing is, if we would stop being so risk averse and explicitly acknowledge the risk issues involved while specifically taking responsibility for them, it would be easy for us to make the case that we should be paid for doing that. That's a language they understand intimately.

So, as part of the agreement for doing the feasibility study, we are very specific about what will be in it, what it will mean, and what risk we will assume by providing that information (e.g what they can stick to us if something about it goes sideways). Then they pay us for the information plus the risk assumption. It's quite straightforward in that sense. The more risk we assume and the higher-value the information, the more it's worth to them. The amount of haggling over price is usually minimal when it's framed that way, even if the price is very high.

el jeffe
Dec 16, 12 2:18 pm

i see, so your agreement is to explicitly assume greater risk. i can imagine that your agreements are exceptionally written and vetted.

thanks for the input here.

gwharton
Dec 16, 12 6:28 pm

It's not just the acceptance of risk. It's also the product delivered. Most architects do a feasibility master plan diagram, write some numbers on it, and call it good. My feasibility studies include several chapters plus a full 3D concept diagram (sometimes with alternates). The report books are usually a half-inch thick.

jplourde
Dec 16, 12 11:47 pm

Charge dollars.  Pay out in Rupees. 

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