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Potential client asking the architect vs. builder question

tagalong

Hey Everyone,

So I have a potential client for a new residence and she is about to make the decision between using an architect (me) vs. going with the a builders in house design group. She called me curious as to how my fees are structured because the builder (obviously) told her that it would be much cheaper to just use his in house designer.

I started to explain how fee depends on the scope of services involved (and that with the builders in house designer, services = 0)

She responded with a worry of not wanting to use up their budget on design services alone.

I told her that it is the architects responsibility to take their clients overall budget and from that budget, provide services and documents for a home they are happy with and include compensation for the architect.

I told her I would put together some information about the differences between the two professions and information about the benefits of working with an architect.

So...if any of you have some good persuasive advice that is suitable for giving someone uneducated in the design/architecture profession, i would be greatly appreciative.

Thanks

 
Aug 3, 10 7:41 pm

separate from the fee amount, make it clear that the architect's role is to be the client's advocate and representative. this is supposed to be the contractor's job, too, but his role is compromised by his other role as the guy delivering the work. the contractor has no vested interest in making the best possible project to fit the life of the client, only to make the client reasonably happy at the best possible profit.

Aug 3, 10 8:13 pm  · 
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207moak

Does the builders in house design group include an architect?

Aug 3, 10 8:38 pm  · 
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cajunarch

Steven said it well - she hires you to be her advocate (and designer of course) or she hires the builder who will be his own advocate and protect his interests above hers.

Simply put, who does she want on "her side" and what is it worth to her, plus any possible design/aesthetic issues.

Aug 3, 10 9:39 pm  · 
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binary

well, you could say that all the details will be figured and on paper so there will be no confusion....

i'm currently working on a project (doing carpentry/etc) and the client didnt want to pay for all the arch services so that leaves me to figure the details when nothing is really spec'd just yet..hmmmm....

Aug 3, 10 9:54 pm  · 
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We have had this conversation with potential clients before and don't always win.

In our case the builders tell the clients the design fee is included (they DO have architects here, because of the need to show calculations for earthquake ready structure). Which simply means they hide the fees.

We use the same argument as Steven suggested. We are advocates for the client. The builder is trying to make money and will therefore act accordingly. He will certainly not try to negotiate lower costs, nor check that the quality of work and parts is worth the costs being charged.

We explain that to clients and they still don't believe us in most cases. I think the truth of the matter is that if they are asking they are not going to be good clients and it is not worth putting too much effort into things.

Recently we offered to do a house with a builder we know, charging a flat fee where the design cost is not made explicit, just as any home-builder will do. I kind of wish they had accepted because we could have made a better profit that way. Unfortunately we had just told them that the design fees are included in the process for all builders and they got real clever and suggested we were tricking them. at which point we stopped trying and they went to a different builder. I think we dodged a bullet and don't mind the outcome. They will pay the same amount for a less good building...their choice.

Aug 3, 10 10:01 pm  · 
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Rusty!

mmmm! good question, but responses are even better!

My approach would be FUD (fear, uncertainty, death), and if there's time, hope.

Ask your client to do a google search on "contractor ripped me off" and see the number of relevant resources put out by less than happy customers. Then have her do a search on "architect ripped me off" to see a trivial list of issues.

“You don’t have the designer representing you – he’s representing the builder.” should be a good start.

You will save her money by specifically selecting less labor intensive (installation wise) materials and finishes. The builder will do the opposite.

The builder may cut corners on items that only become an issue 5-10 years down the line. You are staking your reputation that such issues are eliminated. The builder can easily change their name in case of a disastrous work. You can not.

Try to explain the concept of 'quality control'. Try to include the phrase 'conflict of interest' in your description.

Have a list of typical deficiencies that may arise in the type of renovation she's about to do. I would gladly give you a list right here, but do not know the scope of work. Tell her these are items that will be eliminated with your participation.

You said 'new residence'... Should I assume you are to design an entire house? Tell her how much higher her resale value will be with an Architect designed project. Put together a list of a bunch of famous architects who started off doing residential work: both Franks (Wright and Ghery) and everyone in between. Spark her imagination!

Hope part (if time permits): Put an emphasis that your participation will not only save her money in project cost (a complete fabrication and a blatant lie), but also increase the value of property long term (an objective truth).

Do post back in this thread on the success of your bid. For curiosity's sake.

Good luck!

Aug 3, 10 10:57 pm  · 
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pickfirst

Thanks steelstuds. Can you elaborate on your point:

"You will save her money by specifically selecting less labor intensive (installation wise) materials and finishes. The builder will do the opposite."

My experience has been that architects choose the most expensive materials and finishes. Additionally, the builder's goal is to still make the most profit, your point seems to argue against that.

Of course, everything else you said was just beautiful :)

Aug 3, 10 11:20 pm  · 
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dia

The 'design' element of a D&C price is usually inflated or over represented. So, does every builder create custom design for every job? Not likely.

Therefore is their design fee equivalent in scope to architectural design fee? Nope.

Does she want to live in a copy & paste like everyone else?

Aug 4, 10 12:08 am  · 
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tagalong

well, here is the info I composed for her, thank you for the points made, I borrowed a little bit of your text in some cases....so, we'll see how it goes.

Some items that may be worth consideration:

The greatest advantage to working with an architect is the level of service provided throughout all parts of a new home. The architect's role is to be the client's (your) advocate and representative. This is supposed to be the contractor's job, too, but his role is compromised by his other role as the guy delivering the work. The contractor has no vested interest in making the best possible project to fit the life of the client, only to make the client reasonably happy at the best possible profit for himself. Furthermore, a builder's in-house designer is first tied to and representing the builder, not you.

There are multiple ways cost savings can be incorporated with an architects involvement, examples would be incorporating materials into the design which have lower labor rates, using passive energy saving design techniques to reduce the energy usage of the house for long term cost savings. If issues arise during construction, exploring options that avoid/minimize unforeseen additional cost while maintaining the clients design intent.

A home that is designed by an architect is more likely to have a higher value and appreciation. Good design sells. Your home will also be truly unique.

Construction cost is by far the largest part of any projects budget. Generally, a contractor's overhead and profit margin on' a residential project can range from 18%-25% of the overall project cost, this percentage could go a little higher if they are also providing in-house design services, there exists the ability for the builder to shift some of the fee from design services into other aspects of the project like general overhead and profit.

In today’s economic climate, it is in the owner’s best interest to have builders/contractors compete for a job by placing bids on a set of construction documents. Contractors are hungry for work right now and if they know they are competing with other contractors for a job, they aren't going to inflate their markups & profit.

A builder would like nothing more than to have a client locked into using them for construction of their home through the use of the builder’s in-house design services. An important question to ask is if for some reason you had a falling out with the builder, would you be able to terminate their services and take their in-house designer’s drawings to another builder?

This should be a fun process for you to take part in the design process and realization of your dream house.

Unfortunately the decision isn't as easy as "person A is charging $2.00 for X and person B is charging $5.00 for X." There are so many different variables to how a builder organizes all of their costs within a spread sheet and so much more product and service that an architect provides, it's really comparing apples to oranges. Three things will affect how the money for a project is used: Project Scope (size), Project Quality, and Project Time. I feel the best question you can ask yourself is, "Given that we have $x.xx amount of money that we are willing/able to spend on this house, with who & by what methods do we think will be the best at managing our desires, needs, and budget for this house and give us a home that we are going to be the most happy with?"

I'll let you know if I get the job...

Aug 4, 10 12:58 am  · 
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Rusty!

@pickfirst: I got a bit ahead of myself when I made that statement. What I really meant: imagine 2 cladding assemblies (A & B). Both cost the same to manufacture and install, but A is superior in performance (energy, longevity, warranty, etc...) System A costs 60% in materials and 40% in installation. System B is 40 and 60% respectively.

The builder will pick system B as it is much easier to make a profit from labor component of the overall cost. You, the architect, will pick the system based on the merit of design and performance. You have the moral advantage, and have also selected a system that will be cheaper in the long run. Use this as a selling point.

Now, in reality, the architect will pick the system that's 3 times the cost of the system builder prefers (additional cost mostly used up on fancy materials and finishes). Control over the cost overrun comes with years of experience. Established architects tend to rely on familiar material and system palletes, both due to familiarity (cost, aesthetics) and tested practicality (performance).

Aug 4, 10 3:31 am  · 
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Rusty!

@tagalong:

Your response is good, if a bit too long winded and overly harsh on role of contractor.

I recommend editing down and removing any negative connotations. For example, instead of "The contractor has no vested interest in making the best possible project..." use "Contractor will make a pass at you and sleep with your daughter". Pro-active tone will always come off sounding better :)

These are passages you should revise, and you'll be golden:

-This is supposed to be the contractor's job, too, but his role is compromised by his other role as the guy delivering the work. The contractor has no vested interest in making the best possible project to fit the life of the client, only to make the client reasonably happy at the best possible profit for himself.
-Make it less harsh, if possible. You too will need friends in this industry.

-Contractors are hungry for work right now and if they know they are competing with other contractors for a job, they aren't going to inflate their markups & profit.
-Even worse can be said of architects in this economy. What's your client's name? I haven't eaten in five days.

-A builder would like nothing more than to have a client locked into using them for construction of their home through the use of the builder’s in-house design services. An important question to ask is if for some reason you had a falling out with the builder, would you be able to terminate their services and take their in-house designer’s drawings to another builder?
-Again, too harsh and mean. Even if true. Positive way of saying this would be to emphasize the fact that disagreements with builders are common, and that you are there to make that a non-issue. You are like human flood insurance... against bullies!!

-Entire last paragraph. You almost convinced me there to go with the builder myself. You can say all that in fewer words. You should all but guarantee a similar budget while emphasizing the built in value of your services. Don't take a defensive stance. That's what contractors do..

Otherwise, thanks for sharing! I've enjoyed this thread...

Aug 4, 10 4:25 am  · 
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steelstuds is on the case, tagalong. some of that was my language and i was talking to you. in your comments to your potential client, you don't need to be sowing seeds of doubt about the contractor. in the end you all need to work happily together in partnership.

what you're attempting to sell is your value, but not be de-valuing the role of the contractor.

Aug 4, 10 6:52 am  · 
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wups, yeah i agree, the above language used amongst us is not so good for clients. nobody likes being told everyone but the guy standing in front of you is a cheat. They might just think the opposite is true.

we try to couch our language in terms of what we do for the client rather than what the builder-led competition does not do. apart from pointing out that the final cost is not so different we are pretty fair about how we represent ourselves in the scheme of things.

As a side note, we are just finishing up a house in tokyo where the client's mother suggested using a builder she knew instead of us. We kept hearing this commentary from the sidelines about what the mother thought we should do (i have no idea why since we never met her)...but about a month ago the story changed. The mom went to the site and told our client (aka, her daughter) that there was not a chance in the world her builder friend could have designed or even built what we did especially for the cost we did it for, even including design fees.

I have to admit to being small-minded enough to enjoy hearing that sort of thing. The mother was of course absolutely right. No builder could do what we do.

the trouble is to convey that at the beginning of the project and not have them realise it at the end. still not worked out how to do that and always get the outcome we want. Any advice Steven?

Aug 4, 10 7:29 am  · 
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tagalong

Thanks for the revision comments...

Aug 4, 10 9:19 am  · 
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about the only way i know, jump, is to have a record of work to show. tagalong, show what you've done, share the budget information and a narrative of how the projects went. suggest to the owner that they get the same information from the builder.

in all likelihood they'll see individualized design solutions in your work and samey-samey boxes with custom finish selections from the contractor. you'll be thinking about interrelationship of spaces, siting/views, and how someone lives in the house while the builders' designer ([i]probably[/]) will be thinking about countertop materials and tray ceilings. these are material differences which can be described and compared - not just opinions!

it may backfire, i.e., maybe the owner won't care about individualized design solutions and will only want to pick colors. you're attempting to give them the information to make the right choice - which might not be you...

Aug 4, 10 9:30 am  · 
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makes sense steven.

i was hoping you knew a magic formula ;-)

Aug 4, 10 10:02 am  · 
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JoeyD

"contractor has no vested interest in making the best possible project to fit the life of the client"

This is why architects have had their ass handed to them in the residential market. Pomus attitudes like this where they are blind to the reality the design builder simply makes a better product.

Aug 4, 10 10:07 am  · 
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pickfirst

Excellent response Steven, even down to the last counter nugget. It seems like an age-old question, but only one that I'm recently realizing about the business: how do we sell clients on design? It seems like a constant uphill battle, because we all have preconceived ideas about what it's going to take to do the job. It seems the architect's responsibility is to look under every stone/to account for everything = to show the job as more complex than what was originally thought.

To look at it like that feels incredibly tedious. With each new potential client you must have the mindset to "educate first" on what you do to get the client on board to the process. Jesus, is that what we have to look forward to, constantly having to explain and defend ourselves/what we do?

Aug 4, 10 10:12 am  · 
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CMNDCTRL

JoeyD....are you a contractor? I admit this was a bit misguided, because we are all on the same team. But the reality is that I have seen many builders make simple mistakes like allowing the dew point to occur in the middle of the insulation - hence mold; or not sealing the vapor barrier properly from roof to wall transition - hence leaks...etc. It is the contractor's job to build well according to a detail, which most do! It is the architect's job to detail well, which most don't. It is the architect's job to be the agent of the client, and to also add the intangible part - design/customization of living/use solutions. The best relationship happens when we all work together. Builders are not trained in building science, but architects cannot build (and sadly it seems many of us cannot put a building detail together properly any more either. This is the reason we have hurt our profession in my opinion). We need each other - if it were only builders, everything would look the same, the developer would be rich, but everything would be built to last for only about 10 years. If it were only architects, things might be pretty, but they'd be impractical and probably way too expensive for anyone to afford. Somehow this relationship has been ruined in the US. Let's fix it! Maybe then we'd all be back to work and actually have some money to survive with again!

Aug 4, 10 10:34 am  · 
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blah

Housebuilding projects are going more and more to contractors with "free" design.

Yes, it's nonsense but that's what people want to believe.

David Hovey really looks good these days. He has got it all figured out!

Aug 4, 10 11:44 am  · 
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project management

As a builder of many years, if I was working as an owner's rep, I would advise the client to use an architects services in order to have the option to be able to get competitive bids on the construction. If you go with an in-house designer, you're locked in and have no power right from the start.

Project Management

Aug 4, 10 8:40 pm  · 
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whyARCH?

why do you have a link that sends us back to the discussion page?
That was thoughtful of you.

Aug 4, 10 9:41 pm  · 
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not to be insulting Joey, but i honestly believe the fiduciary responsibility changes things substantially. It does here are least. There is no doubt in my mind at all that a house builder is out to maximise profit, while architects (in general) are out to maximise quality...

am sure there are counter examples out there but in general that seems to be how it works.

Aug 5, 10 2:45 am  · 
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Distant Unicorn

I would say that's the case.

But ultimately-- whether you believe it is a conspiracy theory or not-- groups in the US get together at any level from tradeshows to Chamber of Commerce to decide how they are going to stick it to the usual "consumer unit."

I would say where developers get bit in the ass is at two different points:

1) They are profit driven businesses and a majority of them are publicly traded.

So, say I'm GE or [insert other large appliance manufacturer] with an enormous amount of capital. As such a huge entity, I could effectively buyout a portion of a real estate development company.

They need the cash to build more projects. I get money because they build more and expand their business. But as someone who has a substantial if not controlling share in this company, I can go ahead and turn around and ask them that all of their new housing units have laundry rooms.

From there, I could arrange a profit sharing agreement that if the company also supplies the house with my brand of appliances as an extra "add on," they will get a share of the sales.

While this might be a genius move for business and profit, it really just passes the expense down onto the consumer in multiple ways and also hyperinflates the value of the home.

2) Planned urban developments, "lifestyle centers," and "downtown revitalization" are tricky.

Assuming contingency above of being in bed with too many companies and investors, everyone wants a piece of new retail and residential development.

Many of these developers want independent small business in their developments.

However, that's more than likely an impossibility because most places don't have the cash flow to relocate, the income to move to high rent markets or the ability to plan ahead timely.

Larger companies often do have the ability to set up shop overnight because they have enough assets to pull enormous lines of credit to get that sort of thing done.

Unless the general community is informed well enough in advance and they are given an honest picture of the potential market being created, these sorts of mixed-use projects just fill up with Starbucks, Gamestops and Walgreens.

They aren't bad options but they certainly aren't "community." And when large residential projects are attached to them, they business either positively or negatively affects the curb appeal of said businesses.

Aug 5, 10 3:28 am  · 
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Distant Unicorn

I have seen a lot of cases where many a "lifestyle centers" have turned from faux downtowns with overhead above shop housing to strip malls because the bigger tenants (anchor stores) didn't want to deal with "people living there" and "offending their customers."

When you spend a million or two on planning and zoning variances to do that sort of thing and Target (the company whose rent check subsidizes the entire project) says fuck off... you have to take that loss and "smooth it out over your future projects."

Aug 5, 10 3:32 am  · 
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project management

@WHYarch,

I didn't post it that way, that's some kind of forum redirect.
I'll try it this way:
www.constructionprojectmanagementsoftwareblog.com

Aug 5, 10 5:57 pm  · 
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phld21

@ Unicorn Ghost... that sounds extremely depressing. I'm sorry I read this now.

Aug 15, 10 3:42 am  · 
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phld21

@ Unicorn Ghost... that sounds extremely depressing. I'm sorry I read this now.

Aug 15, 10 3:42 am  · 
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