Now let's be realistic; he probably has a 15-person team (including part-time people doing shit like billing, IT, etc). 15 at $250k each (including travel, communications, overhead, rent and all that shit) is 3.75 mill. The work started in 2003, that's 13 year's worth of fees. $48.75 million before profits.
Noting that smart firms bill enough to account for a cyclic market, I'm saying the fee seems reasonable.
You really think he pays his peeps $250 an hour? That might be the BILLABLE rate, but the kids probably get paid less than 25$ an hour average.
In any case, with a 10-15% profit margin, the profit would be say 12 million over 13 years, after expenses. 1 million per year still sounds a a lot to me.
$80,000,000 divided by 13 years would by ~$6,150,000 a year. That would be for a full-time equivalent project team size of about 24-25 earning about $25/hr direct labor rate assuming the company isn't spending more 20%-21% of its income on direct labor using a billed hourly rate of 5x direct labor rate.
Lets also keep in mind that charging 10% of construction cost on a large scale project is ridiculous if that's only for architectural services. Historically, 10% of construction cost was the aggregate amount billed for architecture and engineering fees as the 10% of construction cost would include the engineering consultants that are subcontracted by the architect (or if the architect also did the engineering work... the architect would keep more of it.)
If the engineering was separated and paid for directly by the client, 2-3% of construction cost for "architectural services" is about right on a large scale project. $80 Million out of $4 Billion would be about 2% of the project. The amount compared to the *Actual* construction cost, it would be about 2.5% to 3%.
If you look at the actual figures with engineering included, the amount with engineering is about 10% of the project budget. That sounds reasonable on a very large project.
There's nothing reasonable about 4 billion dollars RWCB. And your math is the stuff that only bear stearns could dream of.
Apr 21, 16 2:01 am ·
·
That maybe. I don't know the extent and scale of this project, exactly. I'm assuming this is something extremely large scale. Ya... know.... comparable to Grand Central and Penn Station. How much would you think it would cost to build Grand Central today with also state of the art technology and communication systems. It would cost A LOT of money.
Think about it. Take the scale of the project into consideration.
The architectural fee is only $80 Million on a massive $4 Billion project that is massive in scale. It's not a $4 Billion for a 50,000 sq.ft. building. The project's a bit bigger than that.
We can argue whether or not $4 Billion was an appropriate level of investment for ridership use.
Apr 21, 16 3:09 am ·
·
Just so you know, I wasn't judging the $4 Billion price tag of the project. I was judging the fee scale for the project scope and cost level. Honestly, if the ridership was going to be 50,000 a day, I would imagine the $4 Billion was excessive. I wasn't judging if the $4 Billion was wisely spent. I'm not judging that.
Apr 21, 16 3:21 am ·
·
If you hire a starchitect, expect them to design something that will double to quadruple the budget you propose. It's a rule of being a starchitect. Always go over budget. It creates controversy which is why they are a starchitect because of media attention on them.
So, if a non-starchitect gives you a cost estimate, divide by 3 and propose that budget so that as the budget to the starchitect can still stir controversy for media attention on them and still be within reason. This way, they can quadruple the cost and yet, still be within reason even if a little higher than the non-starchitect's proposed estimate.
SODr, comparing annual profit to 13 years' revenue...
this breakdown on costs linked from the article is worth viewing
so, calatrava's fees: 80,000,000 administrative costs: 655,000,000 MEP at adjacent sites: 400,000,000
If you get into the numbers, that 4 billion includes a lot of stuff that isn't really part of the rail station.
Anyway, how much is this supposed to cost? How much would you charge to spend 13 years working on a complicated, politically treacherous project? And how many people would you hire to work for you? What would you pay them?
I'm sure SC got a good take-home out of this. But why shouldn't he? He did something nice, difficult, and time-consuming. I'd be surprised if he personally got more than 5-8 million out of it. Which, again breaks down to 500,000/ year. Nice, but not at all a lot compared to CEO's of any of the other companies involved in this project.
$80 Million architectural services fee on a ~$4 Billion project.
The $4 Billion project is a big project. $80 Million of that is average for "architectural fees" (not including the engineers and other consultants and other misc. people... just for the architectural services) to a project of that size.
Is $4 Billion excessive for this project? I can not say. I'm not judging. I'm leaving that to others.
20 people @ $150/hr x 2000hrs = $6m per year staff costs
$6m x 13yrs = $78m
then consultants, dedicated office(?), travel (?), renderings/videos, print sets, etc
$80m seems kinda low if that kind of staffing is reqd for that long, esp if it included consultants
Apr 21, 16 5:21 pm ·
·
Yes proto. $150/hr is Billed hourly rate. The only consultants if any included were not the engineering as that was apparently separated out and paid by the client and they probably using a CM-at-risk or something along that line.
$150/billed hourly rate. The staff was probably paid ranging from $15/hr to $45/hr. direct pay aside from individuals at higher rate but not full-time to the project. I would think the direct labor cost is only about 20%-25% of the actual billed rate. I would think they would be using 4x to 5x multiplier and not overpay staff by using more constrained salaries and all. This wouldn't be too uncommon or unheard of. Long term sustainable corporate businesses in any occupation doesn't spend more than 20-25% of income on direct labor.
We don't know the exact number of team members and their exact hours involved and their actual wage or salary by the hour rate. In any case, I would put the project related direct labor at around 20% of the billed rate. There would be a little bit of indirect labor and a profit margin (with a planned percentage of as retained earnings).
What's your billable rate Balkins? How much are you paid an hour?
The answers are, you don't have one and you don't get paid by the hour.
Given your name sake, people probably just write you the biggest check they can make out and you're backlogged with 10 years of billable work with fees exceeding even calatrava's wildest dreams.
Pro-practice, Balkins doesn't apply. He's rewriting the rules of the game. Keep crushing it b-dub.
Apr 21, 16 5:54 pm ·
·
no_form,
Actually, the answer would be: Variable and not always is the billing in the form of "Billed Hourly Rate". If I was designing.... say a $4 Billion Housing Development project over large tracts of land.... say.... 7,500 to 8500 houses, it would be a different fee than if I was designing a custom house.
Also, the 80M is probably not hourly. No PM in NYC accepts an hourly contract on a project of that scope. 80M is probably a dozen different contracts.
Apr 21, 16 6:08 pm ·
·
null pointer,
ok. Fair enough.
The rest: I wouldn't expect to see a 7500 to 8500 home tract development project. It isn't something I would be expecting to see anytime soon. It's pie in the sky hypothetical. The current market trends would prohibit that kind of projects. Unless people start clamoring to move into an area like they did in the second half of the 20th century in the L.A. area, it is doubtful.
Apr 21, 16 6:16 pm ·
·
N_P,
I agree. I would still think the direct labor is probably closer to 20% of the $80 Million. There's a chunk that would go out in taxes. A chunk that is retained earnings. A chunk that goes to the firm shareholders (probably incorporated) as dividends. There's chunks going out to insurances.
so, few things bug me as much as imputing that architects working on expensive projects are inherently overpaid - as if everything should be valuated as compared to building spec housing in texas.
I went full balkins on this and found a good comp - SF's in-construction Transbay Center, which is a large intermodal rail hub in the center of the city. I don't know how the two projects compare sq ft / sq ft... doesn't really matter. No two urban transit centers are going to work out the same. The projected cost is 4.5 billion USD... and it's probably going to run over. So it's in the same range.
Pelli Clarke Pelli got a contract for 105 million to do the design. Yes, that includes the tower. But it's also a less complicated site in many ways. So it suggests Calatrava's fee wasn't more than a similarly-qualified architect would be.
Transbay though is quite conventional looking, boring in a nice way. And on a site with no national attention. So it probably won't attract the same degree of criticism.
I am satisfied that between the service-cost estimates of proto + null and my quick look at a comp, Calatrava's fee was reasonable. If you feel underpaid, quite whining and find work on something more useful.
Stop bitching about the biz and be Calatrava!
$80 million fee for the WTC Transit Hub (seems ridiculously high).
http://gizmodo.com/can-you-guess-how-much-the-architect-of-the-most-expens-1771906828
For comparison, the very large corporate firm "a friend" works for had 65 million $ in profit last year.
baller.
Now let's be realistic; he probably has a 15-person team (including part-time people doing shit like billing, IT, etc). 15 at $250k each (including travel, communications, overhead, rent and all that shit) is 3.75 mill. The work started in 2003, that's 13 year's worth of fees. $48.75 million before profits.
Noting that smart firms bill enough to account for a cyclic market, I'm saying the fee seems reasonable.
You really think he pays his peeps $250 an hour? That might be the BILLABLE rate, but the kids probably get paid less than 25$ an hour average.
In any case, with a 10-15% profit margin, the profit would be say 12 million over 13 years, after expenses. 1 million per year still sounds a a lot to me.
my calc doesn't have commas, so maybe I miscounted my zeros, but isnt a 2 percent fee pretty low?
looks like total design fees are a little over 10%, a bargain!
If you didn't go into architecture to be the next starchitect, it probably means you're a horrible designer and it just wasn't meant to be.
That's only 2% of 4 billion. Not a very big fee.
250/hour? who said that? god, you're a moron.
$80,000,000 divided by 13 years would by ~$6,150,000 a year. That would be for a full-time equivalent project team size of about 24-25 earning about $25/hr direct labor rate assuming the company isn't spending more 20%-21% of its income on direct labor using a billed hourly rate of 5x direct labor rate.
Lets also keep in mind that charging 10% of construction cost on a large scale project is ridiculous if that's only for architectural services. Historically, 10% of construction cost was the aggregate amount billed for architecture and engineering fees as the 10% of construction cost would include the engineering consultants that are subcontracted by the architect (or if the architect also did the engineering work... the architect would keep more of it.)
If the engineering was separated and paid for directly by the client, 2-3% of construction cost for "architectural services" is about right on a large scale project. $80 Million out of $4 Billion would be about 2% of the project. The amount compared to the *Actual* construction cost, it would be about 2.5% to 3%.
If you look at the actual figures with engineering included, the amount with engineering is about 10% of the project budget. That sounds reasonable on a very large project.
That maybe. I don't know the extent and scale of this project, exactly. I'm assuming this is something extremely large scale. Ya... know.... comparable to Grand Central and Penn Station. How much would you think it would cost to build Grand Central today with also state of the art technology and communication systems. It would cost A LOT of money.
Think about it. Take the scale of the project into consideration.
The architectural fee is only $80 Million on a massive $4 Billion project that is massive in scale. It's not a $4 Billion for a 50,000 sq.ft. building. The project's a bit bigger than that.
We can argue whether or not $4 Billion was an appropriate level of investment for ridership use.
Just so you know, I wasn't judging the $4 Billion price tag of the project. I was judging the fee scale for the project scope and cost level. Honestly, if the ridership was going to be 50,000 a day, I would imagine the $4 Billion was excessive. I wasn't judging if the $4 Billion was wisely spent. I'm not judging that.
If you hire a starchitect, expect them to design something that will double to quadruple the budget you propose. It's a rule of being a starchitect. Always go over budget. It creates controversy which is why they are a starchitect because of media attention on them.
So, if a non-starchitect gives you a cost estimate, divide by 3 and propose that budget so that as the budget to the starchitect can still stir controversy for media attention on them and still be within reason. This way, they can quadruple the cost and yet, still be within reason even if a little higher than the non-starchitect's proposed estimate.
SODr, comparing annual profit to 13 years' revenue...
this breakdown on costs linked from the article is worth viewing
so,
calatrava's fees: 80,000,000
administrative costs: 655,000,000
MEP at adjacent sites: 400,000,000
If you get into the numbers, that 4 billion includes a lot of stuff that isn't really part of the rail station.
Anyway, how much is this supposed to cost? How much would you charge to spend 13 years working on a complicated, politically treacherous project? And how many people would you hire to work for you? What would you pay them?
I'm sure SC got a good take-home out of this. But why shouldn't he? He did something nice, difficult, and time-consuming. I'd be surprised if he personally got more than 5-8 million out of it. Which, again breaks down to 500,000/ year. Nice, but not at all a lot compared to CEO's of any of the other companies involved in this project.
80 million is not a big project.
it's bigger than a 70 million project. just saying. that's kind of obvious though.
Balkins, shut the fuck up.
$80 Million architectural services fee on a ~$4 Billion project.
The $4 Billion project is a big project. $80 Million of that is average for "architectural fees" (not including the engineers and other consultants and other misc. people... just for the architectural services) to a project of that size.
Is $4 Billion excessive for this project? I can not say. I'm not judging. I'm leaving that to others.
20 people @ $150/hr x 2000hrs = $6m per year staff costs
$6m x 13yrs = $78m
then consultants, dedicated office(?), travel (?), renderings/videos, print sets, etc
$80m seems kinda low if that kind of staffing is reqd for that long, esp if it included consultants
Yes proto. $150/hr is Billed hourly rate. The only consultants if any included were not the engineering as that was apparently separated out and paid by the client and they probably using a CM-at-risk or something along that line.
$150/billed hourly rate. The staff was probably paid ranging from $15/hr to $45/hr. direct pay aside from individuals at higher rate but not full-time to the project. I would think the direct labor cost is only about 20%-25% of the actual billed rate. I would think they would be using 4x to 5x multiplier and not overpay staff by using more constrained salaries and all. This wouldn't be too uncommon or unheard of. Long term sustainable corporate businesses in any occupation doesn't spend more than 20-25% of income on direct labor.
We don't know the exact number of team members and their exact hours involved and their actual wage or salary by the hour rate. In any case, I would put the project related direct labor at around 20% of the billed rate. There would be a little bit of indirect labor and a profit margin (with a planned percentage of as retained earnings).
The answers are, you don't have one and you don't get paid by the hour.
Given your name sake, people probably just write you the biggest check they can make out and you're backlogged with 10 years of billable work with fees exceeding even calatrava's wildest dreams.
Pro-practice, Balkins doesn't apply. He's rewriting the rules of the game. Keep crushing it b-dub.
no_form,
Actually, the answer would be: Variable and not always is the billing in the form of "Billed Hourly Rate". If I was designing.... say a $4 Billion Housing Development project over large tracts of land.... say.... 7,500 to 8500 houses, it would be a different fee than if I was designing a custom house.
The fee could be comparable if not more.
Balkins, that shit is irrelevant.
80M is ok.
Carry on.
Also, the 80M is probably not hourly. No PM in NYC accepts an hourly contract on a project of that scope. 80M is probably a dozen different contracts.
null pointer,
ok. Fair enough.
The rest: I wouldn't expect to see a 7500 to 8500 home tract development project. It isn't something I would be expecting to see anytime soon. It's pie in the sky hypothetical. The current market trends would prohibit that kind of projects. Unless people start clamoring to move into an area like they did in the second half of the 20th century in the L.A. area, it is doubtful.
N_P,
I agree. I would still think the direct labor is probably closer to 20% of the $80 Million. There's a chunk that would go out in taxes. A chunk that is retained earnings. A chunk that goes to the firm shareholders (probably incorporated) as dividends. There's chunks going out to insurances.
my speculation above was just trying to make sense of the total dollars
no intended implications for actual salaries or contract type, just showing my work
the fee is not outlandish by my (highly subjective) math
i could be full of shit, ymmv
so, few things bug me as much as imputing that architects working on expensive projects are inherently overpaid - as if everything should be valuated as compared to building spec housing in texas.
I went full balkins on this and found a good comp - SF's in-construction Transbay Center, which is a large intermodal rail hub in the center of the city. I don't know how the two projects compare sq ft / sq ft... doesn't really matter. No two urban transit centers are going to work out the same. The projected cost is 4.5 billion USD... and it's probably going to run over. So it's in the same range.
Pelli Clarke Pelli got a contract for 105 million to do the design. Yes, that includes the tower. But it's also a less complicated site in many ways. So it suggests Calatrava's fee wasn't more than a similarly-qualified architect would be.
Transbay though is quite conventional looking, boring in a nice way. And on a site with no national attention. So it probably won't attract the same degree of criticism.
I am satisfied that between the service-cost estimates of proto + null and my quick look at a comp, Calatrava's fee was reasonable. If you feel underpaid, quite whining and find work on something more useful.
"full balkins" lol!
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