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Going solo - how to price for a condo renovation in NYC

Ashleyglen82

so after working for 10 years with a boutique architecture firm I have gone solo. Given I am relatively new to being solo, the overhead is still low. 

Introduction via an ex client has landed me a condo renovation job in NY. 1500 sqft 3BR/ 3 BA condo and the client will be doing the following 

1. Update 3 BRs

2. Open up the wall between kitchen and the living room and upgrade kitchen

3. Install recessed lighting throughout the apartment

4. New flooring, doors, hardware etc

Thankfully I have worked with this building before and know how the building works and know the building architect. 

I want to price it competitively as this would be one of my “featured” projects without going too low. 

Just would love to get some advice. 

 
Sep 19, 22 11:00 am
l3wis

are you competing for this job at this point, or is it basically yours and you're just making a formal proposal for your client?

Sep 19, 22 12:58 pm  · 
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Ashleyglen82

The client is very keen based on my previous work but I wouldn’t say I have landed it yet. sharing a proposal with services I am including and the rate is part of the process. 

Sep 19, 22 1:01 pm  · 
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reallynotmyname

The speed, honesty, and skill level of the contractor and subs building this thing will greatly affect your time spent on the job and its profitability for you.  Are you in a position to make sure they get someone good?

Sep 19, 22 1:03 pm  · 
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atelier nobody

Start here. If the client balks, decide then how much you're willing to short yourself.

(This is from RS Means, BTW, in case you don't recognize it.)

Sep 19, 22 1:03 pm  · 
2  · 
l3wis

what is this resource? i was going to say a respectable fee for a solo prop, for a small, high-quality residential project would be 10% not including consultants. if you want to go low and don't mind shrinking your profit margin i would say you could go as low as 7.5% without being totally desperate. i am west coast based.

Sep 19, 22 1:12 pm  · 
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reallynotmyname

Be sure you have a good grip on your engineering consultant prices before promising anything. Consultant fees are running pretty high right now. I used to be able to tell people we could do the architecture and provide MEP subs for roughly the prices on the R.S. Means chart above, but that's not the case at the moment.

Sep 19, 22 1:24 pm  · 
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Why not just ask your constants for a proposal for the work? Is that not something that is done in NYC residential work?

Sep 20, 22 10:13 am  · 
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Ashleyglen82

The client already has a GC. While I haven’t worked with GC before, he has done two other projects in that building and he clearly knows what he is doing. 


Based on what I have seen so far, my sense is the overall project is circa $500k. I don’t think I would be able to ask for more than 7.5% and still get the project. 

Sep 19, 22 1:31 pm  · 
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So that's $375,000 in total fee, roughly 75% of that will be yours and the rest will go to MEP and Structural. So $281,250 will be yours at most. 

 If you bill out at $150 an hour you'd need to do the project in around 1,500 hours if you want to make a 15% proffit.  

Sep 20, 22 10:16 am  · 
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jcarch

$37,500...217 hours for a 15% profit at $150 an hour if all the fee is for architectural. Likely no structural, very possibly no MEP unless there's HVAC work involved. Ashleyglen82, are you going to file this yourself or use an expediter? If you're using an expediter, that should be on top of your 7.5% IMO.

Sep 20, 22 1:26 pm  · 
2  · 

Whoops! I had a flub with my fingers and added an extra zero. Thanks for the catch!

Sep 20, 22 1:28 pm  · 
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l3wis

I don't think its customary in residential to parse out structural and MEP costs. The contracts I have seen are structured as all costs associated with construction including contractor gen conditions, fees and overhead. So the 500,000 would be 'the budget' from which the fee is calculated

Sep 20, 22 1:49 pm  · 
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Ashleyglen82

Expediter fee and any other specialist consultants required will be on top.

Sep 20, 22 2:11 pm  · 
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What I'm accustomed to in commercial work is the architectural fee includes Civil, Landscape,Structural and MEP fees. Obviously any consultants hired by the owner and specialty consultants are excluded. Roughly the architects fee is 70-75% of the total project fee. The remaining fee is for the consultants.

Sep 20, 22 4:22 pm  · 
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jcarch

Sorry in advance for the long post, but here are a few things I wish I'd done from day one, working solo in NYC:

First, specify how many hours are included in CA as part of your base fee, w/ anything beyond that cap being billed hourly.  Be able to explain how you came up w/ the included hours (i.e. construction will take 12 weeks, and I anticipate spending 5 hours a week on CA, so my cap is 60 hours).  This protects you from the owner hiring a GC who isn't up to the task (he was 50% lower than the other bidders, we'll save a fortune!), causing construction to take 20 weeks, and you to spend 10 hours a week on CA.

Second, call out how many initial design options are included in the base fee, again w/ hourly charges for extra options.  I had a client for a simple NYC apartment combo when I first started out who just couldn't make up their mind, and I ended up presenting 15 unique layouts to them, only to have them eventually go with one of my initial 3 options.  It was infuriating, and very costly on my end.

Third, set up the schedule of your payments, and the repayment of their retainer, so that there's very little (ideally zero) dollars left on the table at the end of the project.  My last invoice to residential clients is typically $X,000 for the last of CA, and -$X,000 for the repaying the balance of the retainer, so $0 total.

Fourth, in NYC, for them to close out their project, you'll need to sign the PW-6 form if they're getting a new C of O, or to sign off for completed Directive 14 final inspection and request the Letter of Completion.  My contract states that I don't do any of that stuff if the client hasn't paid all outstanding invoices in full.

Three and four are both to protect against the occasional client who's unethical.  They exist, and you can't tell them from the honest client until they try to pull something, and from experience, they try to pull s**t at the end of the project, when they don't need you anymore.  It may be "oh, we're not happy with the kitchen, so we shouldn't have to pay your last invoice," or "construction costs (which they approved) were higher than anticipated, we don't have anymore money."

Sep 20, 22 8:54 am  · 
7  · 
Stasis

great points, jcarch. I'd break down the fees per phases and explain scope for each phase. Perhaps introduce CA service as an Add-Alternate, giving a choice to the client to move forward with the design phases first. If the entire fee isn't that significant, then this is unnecessary. Splitting CA service also gives an opportunity for architects to revise the CA fee later once they get better idea on how long the construction would take. I'm sure everyone knows this, but I spent time carefully composing 'Assumptions, Clarifications, and Exceptions' to list as many disclaimers as possible to protect one's tail. I'd even add how many round of plan check responses AOR will address, and any additional round can be done at additional hours and fees. I'd also provide a preliminary design schedule with design freeze date to indicate that any changes requested after that point should be additional service. I totally agree with the fee schedule. It's always important to take some work hostage until you get fully paid. I've taken stronger stance with some lousy clients and refused to issue a revised permit set until the milestone fee was paid.

Sep 20, 22 5:01 pm  · 
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jcarch

All good points. Another thing to include is that any changes after the work is approved are additional services, billed hourly, whether or not those changes impact the construction cost. Of course you then have to create approval mileposts along the way. I either state in meeting minutes that the design was approved, or e-mail the client to say the same thing. Had a client once try to claim that they hadn't actually approved something as the specific words "I approve" were not uttered. Had another who claimed that changes should be extra only if they impacted the construction cost, since our fee was a percentage of construction costs.

Sep 20, 22 6:42 pm  · 
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Stasis

Yes, meeting minutes are so important.. i found myself going back to the minutes in order to fight against client's revisionist memory.. I use OneNote to keep everything in one spot.. I also track things on Design Action Log, Decisions Log, and Risk Register. This is only recommended for PMs like me, as I don't work on designs or drawings anymore so i have time to maintain these logs. The clients appreciate our effort in looking out for potential project risks in cost and schedule. It also gives me opportunities for change orders if the client causes late changes or delays. Since I was upfront about potential changes, I found most of my clients were more receptive and agreeable to COs. If scope is clear or manageable and my team is confident in completing the task, then I'd prefer lump sum fee. In most cases, I'd add 10% contingency and also reserve 5-10% from my team's resource hours. So, I make about 15-20% additional profit if a project is executed well. I find it more challenging to make profits on T&M and NTE basis. In this one, you'd have to spend close to 100% or leaving money on the table. You'd only get profit built in the fee rates..

Sep 20, 22 11:23 pm  · 
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bennyc

Ashley, i have done many apartment projects in NYC, as an architect as well as a general contractor. 

Make sure you cover your architectural / design fee based on % of cost, or a flat fee for a bare minimum technical drawing set. From my experience, a bathroom or kitchen design can go from 8 hours to 80 hours very quickly. I usually break down my fee as follows:

1. Technical permit set for NYC dob fiilng - $4% of const cost or fixed lump sum

2. Design drawings for kitchen, bathrooms, bedrooms etc - usually put a not to exceed hour number on here or give my hourly rate (clients never go for hourly rates so a fixed number is best

3. There is a lot of items to coordinate in an apartment renovation, such as condo board review, waterproofing details, unforseen conditions, adaptablity laws for nyc. In addition, you also have to file the project with NYC dob and coordiante asbestos reports, tenant protection plan with building etc etc

In other words, make sure you cover your technical permit set, your design hours, and make sure you exclude everything else you are not aware of , being mindful that the client will be surprised later by all this additional costs so make sure they are aware your fee only covers design work / drawing work. 

Sep 21, 22 7:16 am  · 
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