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AIA fee deregulation?

toasteroven

hey-

does anyone know anything about the US government deregulating Architect's (AIA) fees back in the 60s/70s?

are there any books on the subject- like - a critical look at how fee deregulation has effected the profession over the past several decades?

do other professional organizations regulate fees?

any help would be greatly appreciated.

-to

 
Nov 30, 05 11:10 pm
Cameron

actually it was in the late eighties... the AIA got their rear handed to them for price fixing and have been soft on protecting the rights of the profession ever since...

Talk to John Cary and the kids at the 1% solution they should give you the details...

Architects 6-12% fee
Interior Designers 15-35% fee

hmmm.... here is a case for being an interior designer....

Dec 1, 05 12:36 am  · 
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quizzical

once upon a time, long, long ago, in a galaxy far, far away, the aia published "recommended" fee schedules for members to use as guidance when quoting fees ... the U.S. Department of Justice, through it's anti-trust division, took the aia to court, citing "restraint of trade" ... eventually, the aia and the dept. of justice entered into a consent decree that requires the aia to refrain from such activity.

since that time, fee competition has become something of a free-for-all, since there is no established or widespread basis that design firms can look to ... the economic power in the relationship shifted over to the client side and has not shifted back ... gradually, oh-so-gradually, more firms are learning how to calculate appropriate fees and negotiate what they need ... but, this has been an extreme struggle

in my view, this one event has had a profound negative impact on the economics of our profession and, at least superficially, is the primary reason compensation levels in architecture have not kept pace with compensation in other professions

you can find the aia's current guidelines on this matter here: aia antitrust

Dec 1, 05 10:00 am  · 
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ochona

i have a theory that there is an inverse proportion between how much people need something and how much they are willing to pay for it.

we pay police officers and firefighters like crap. they are the people we NEED the most in society.

we pay baseball players and CEOs like goes. they are the people we need LEAST in society (baseball players...that's self-explanatory, but it's arguable that the average Fortune 500 CEO does very, very little to actually run their company -- it's done by upper- and middle-management)

we NEED food and gas and grumble about the prices of both. we WANT SUVs and home-theater systems and will shell out tons of money when a corolla and a tv with rabbit ears would do

thus the disconnect between architects and interior designers. boy, that 35% fee is not an exaggeration. of course, IDs often make money by serving as purchasing agents with a markup

and even within architecture -- you NEED Acronym Architecture Associates Plus to design your bus shelter, you WANT tadao ando to design your church...how much does AAAP charge per hour vs. tadao?

as for fee schedules, they are just what the DOJ says they are: instruments of price fixing. i'd say that the erosion of compensation has had more to do with oversupply of architects than the elimination of fee schedules

Dec 1, 05 10:30 am  · 
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ochona

like gods, not like goes...wha?

Dec 1, 05 10:31 am  · 
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quizzical

ochona ... okay, your points are well taken ... your points also read somewhat like we're in the role of "victim" ... however, having read some of your other posts, i suspect you don't really feel that way

we are not victims here ... sure, top athletes and entertainers are going to make more money than we do in this society ... but, we still have the capacity to control our own economic destiny ...

however, that will happen only if we are willing to take a stance individually ... only if we're willing to quote fair fees and then not knuckle under when the client says "that's too much"

there's always going to be another architect who will quote the work for less ... we each have to make a better case that we're providing the value inherent in the fees that we quote ... until we do that in such a way that the client can see, and appreciate, that value, we will not enperience higher fees

Dec 1, 05 11:30 am  · 
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ochona

quizzical -- no, i don't really see architects as victims of anything -- the whole need/want disproportion is just the way of the world, and if anything i am too resigned to the way of the world!

and you have exactly hit upon the point that i was going to make, which is: if a fee is FAIR then there's no negotiation involved, either take it or leave it.

clients too often go into negotiations thinking that the architect is going to try and charge as much as s/he can get away with. i think that's just somehow wrong, but i guess i'll never be a CEO then, will i?

Dec 1, 05 11:53 am  · 
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quizzical

i think it's always interesting to ask clients how often they negotiate fees with their lawyers or their doctors ... in my experience, with those professionals, there's virtually no negotiating taking place ... you pay what they charge ... if you don't like what they charge, you go somewhere else or you go without.

Dec 1, 05 12:14 pm  · 
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ochona

amen

Dec 1, 05 12:23 pm  · 
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Cameron

look there is very little backbone is the design associations we have right now... even though they are spending between $500,000 to $800,000 a year of your fees on lobbyists..

/and that $3M ad campaign a couple of years ago was a joke...

-- remember this issue is with FEES not salaries... ..Architecture firms are never going to be viable entities if we are trying to undercut fees yet be 'in line' with salary increases..



From a recent article in a building magazine -- "It pays to be an architect. At least that's what the American Institute of Architects is suggesting after releasing its recent compensation survey. Architects, on average, earn slightly more than $60,000 a year, including overtime, bonuses, and incentive compensation, according to the AIA survey of 1,200 firms, conducted in Q1 2005. That's 33% higher than the average $45,000 wage of typical white-collar professional jobs. Wages at architecture firms have grown faster than salaries in other professions for the past nine years, according to the U.S. Labor Department. ..."

Dec 1, 05 1:12 pm  · 
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myriam
as for fee schedules, they are just what the DOJ says they are: instruments of price fixing. i'd say that the erosion of compensation has had more to do with oversupply of architects than the elimination of fee schedules

I don't know if I agree. What is the basis for your belief in the oversupply of architects? I think you've referred to that before.

Dec 1, 05 2:50 pm  · 
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myriam

that was meant for ochona, btw. sorry. and i don't mean it to be combative, i'm genuinely curious.

Dec 1, 05 2:51 pm  · 
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quizzical

back to toasteroven's original inquiry ... while i am not aware of any books that specifically address the impact of the consent decree on the profession, here are a few books that might begin to shed a little light on some of what you want to know:

Architecture: The Story of A Practice

Architectural Practice: A Critical View

Architecture: A Candid Guide to the Profession

State of the Profession: Adaptation of the A/E Species

How Firms Succeed: A Field Guide to Design Management

as for professional associations "regulating fees" ... i'm pretty sure the Department of Justice would look askance at such efforts, if done in an overt way ... however, there are some pretty strong pricing cultures out there, such as in the real estate industry where a 6-7% commission is pretty standard ... we design and detail whole buildings for what real estate brokers charge to simply sell that building

of course, in the medical profession, prices tend to be set not by the doctors, but more by what the insurance industry is willing to pay in the form of reimbursements ... but, that's an entirely different situation altogether.

Dec 1, 05 3:33 pm  · 
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liberty bell
we design and detail whole buildings for what real estate brokers charge to simply sell that building

Yep, quizzical, we spend 9 months of work to make the same fee on the same building that a real estate broker makes in a couple of hours on the telephone. Stomach-turning, but that's the reality.

Dec 1, 05 3:40 pm  · 
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stone

myriam: the abundance, or shortage, of architects tends to be countercyclical with the level of spending for new building construction -- meaning that when there's lots of construction activity, there tends to be a shortage of experienced architectural labor available. however, when construction spending falters, there are a lot of unemployed, or underemployed architects, suggesting an oversupply.

i've seen some research (can't remember exactly where) that suggested that over the past 50+ years (i.e. since WWII) the number of graduate architects has grown much, much faster than the growth in spending for new building construction. while a lot of those graduates have chosen not to practice, i suspect the growth trend still has, on average, tended to make the availability of architectural labor less scarce

quizzical references above Robert Gutman's book "Architectural Practice: A Critical View" -- i've read that book and I seem to remember that it contains an exhibit showing the growth of various professions compared to the growth in urban population. if i remember that exhibit correctly, i think our profession has grown much faster than the population in general -- over that same period of time, the ratio of lawyers and doctors to the general population actually has declined substantially

Dec 1, 05 3:55 pm  · 
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myriam

A good friend of our office is a high-end real estate broker. He has admitted to us before that his effort in selling a multi-million dollar house was basically placing an order for flower arrangements, having his assistent run over with a vase, spending a few hours doing walkthrus, being present for one open house (for tradespeople only, no clients), and going through a few hours of paperwork. His fee was 6% and amounted to much, much more than our office had made building the entire house 3 years previously.

Dec 1, 05 3:56 pm  · 
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rayray

I hate brokers! - that is so unfair.

Dec 1, 05 4:11 pm  · 
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TED
Brooks Act

how does this thing called archinect stay afloat without me i ask?

if your a practitioner and havent heard of brooks, you aint shit.

Dec 1, 05 7:13 pm  · 
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stone

for those of you who don't really want to read The Brooks Act (all insomniacs excepted) this act requires Federal agencies to base the selection of design teams on a) qualifications first, and b) fees second. a design team is selected based on their qualifications to perform the work and then the agency in question strong arms them as to their fee ... if the fee can't be worked out, then the agency goes to the next most qualified firm.

while a noble idea, in my experience, The Brooks Act has added little true value to most practicing architects ... federal agencies still have all of the power when it comes to negotiating fees ... most state and local governments simply ignore the QBS principals it entails ... the private sector could not care less

Dec 1, 05 7:29 pm  · 
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TED

back in the 80's the aia chicago proposed to the national board [and got through] a proposal for national architectural fee schedules based on sf and use [it was proposed by an som partner who was the aia pres at the time who wanted it similar to uk practice]

well needless to say the aia got its balls cut off for anti-monopoly price rigging by the feds. and that partners is no longer at som.


whats now more ironic is when you work for certain state agencies in ill the will prescribe the fees and give you a take it or leave it approach.

technically they cant award project based upon fee proposal. but they do.

Dec 1, 05 7:48 pm  · 
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toasteroven

wow! so much response to what i thought was an obscure question.

thanks for the book recommendations - sources, etc...

as far as fees- i'm curious as to what they were before the change in the 80s (which i didn't know it was that recent) - i've heard numbers as high as 20%... does anyone know where I can obtain a copy of those "recommended" fees?

everyone's comments are very interesting- i wonder why this isn't talked about more in the arch community (maybe because people think it is illegal?)...

thanks!

-to

Dec 1, 05 8:42 pm  · 
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TED

yup -

brother, 20% aint high

were talk.n anti trust and collusion.

dont know what the fees were in the 80's but you might take a look at a book published by SPOON which published prescribed uk fees or the riba for

but i have submitted some proposals with fees where their has actually been bid openings of arch fees. so as there were repeated submissions, one got to know what fee would work

as i said most govern projects are pushing the fees down the troughts of archs and saying take it or leave it. too low to do any work

for example

http://www.cdb.state.il.us/forms/download/FeeHandBook.pdf

Dec 2, 05 4:25 am  · 
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quizzical

toasterover: i suspect that if you visit the library at any decent college of architecture, you are likely to find old versions of the Architect's Handbook of Professional Practice ... i suspect versions published prior to the consent decree will contain the recommended fee schedules.

Dec 2, 05 8:58 pm  · 
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