Are you doing interior finishes? CO? Pulling the permit? Are there historic district submittals? Do they have a survey already?

Let's assume we're doing interiors and pulling the permit, but that the contract stops at the end of CDs (we'll negotiate a different CA contract.)

No historic review.

Also, would the fee you're mentioning include, or be separate from, our consultants?

Let me put you light years ahead of most architects, regardless of what the total scope or speculated fee is intended to total:

1). Get a retainer amount before turning on your computer.

2). Bill in short periods, and do no further work without the "next" payment in hand.

I assume you mean a structural engineer; for HVAC and electrical, design-build is typical for a residence. A surveyor they negotiate separately.

Here's what we do: 10% of construction cost includes interior and exterior finish selection and includes CO. We work hourly to a fixed fee through SD, get the SD drawings budget priced, then if the client proceeds our 10% is based on the budgeted SD figure less what they've already paid us and not including the builder's fee. If scope changes, our fee is pegged to whatever the final construction cost ends up being; if it's not a significant scope change, we just keep it at the SD figure.

But! this is in the Midwest where the market won't bear much more than 10%. On the coasts, go for 15%. On the other hand, we do more renovation work than new construction; the former can demand a higher fee because you never know what you'll find when you tear down a wall.

If we have a structural engineer, we pay them out of our fee, but our projects are never more than a few hours of their time if we have a tricky span or something. More often the builder sizes joists etc. themselves. We lay out RCPs and locate where we want HVAc grilles to be, but that's all negotiable on the jobsite.

It would be great, though, to hear from other architects what they charge.

Also, keep in mind that 10% of construction when figured in with land and mortgage costs ends up being closer to 4% of the total cost of new-custom-designed homownership. Tell your clients that.

Thanks Kurt! We have a client right now who's $18,000 in arrears. If we'd structured the contract differently, this wouldn't have happened.

So we're rethinking our contracts today.

I usually settle for a hand job, cohiba and shot at the wife and or college age daughter

So it's the husband giving you the hand job, then, evil?

I'd have to charge xtra for that kinky stuff

In CA the usual fee is around 15% of construction cost - sometimes it includes the structural engineer, sometimes it doesn't (usually is only included on large jobs). Other consultants are extra. Well known architects charge 17-18% of construction costs in the Los Angeles area, not including structural.
We have charged as low as 10% incl. structural when we were doing design build, but we lost money and I would not do that again. Sometimes we charge hourly, usually only for projects with budgets under 150K or so, in that case we charge $100/hr.
For a current job I am working on the client negotiated something different, a $ per sq.ft. fee based on 15% of $250/sf. It seems like it will work out well but it remains to be seen how it goes in the long run - the design has more sq.ft. than when we started, but the final cost will also be sustantially more than the initial budget discussed. This way we are paid more as the scope increases, but they don't have to worry about our not being concerned with the budget because our fee is not tied to the final cost. Our fee will probably work out to something like 10-12%, not including structural, but so far I am ok with it because the client is very easy to deal with.
Generally we do selection of interior finishes and fixtures, incl. paint colors, but not furniture. Theoretically furniture and landscape design are a separate fee, but sometimes we include some of that work because we want the project to turn out well (and so far we haven't had any clients who could pay for those services).

Also I should note that we do cost estimates along the way and adjust the billing accordingly. Because we did design build we are pretty accurate with the estimates. There is often some conflict when the actual construction cost comes in at a lot higher than the initial budgets and our fee is tied to that final cost, even if all along the way we explain to the clients why the decisions they are making will increase the cost. This is why I like the $/sf option we are currently working with.

When we did contractor lead design build the contract was between architect and builder - flat fee. Contractor either made or lost money on the design but the architect was gurunteed payment - meaning contractor sold design fees to client then contracted the architect - sometimes he was over sometimes under.


Traditionaly my office bills hourly and never fully and usually loses money on small residential. I hate that - but my boss the owner rolls so many "hours" of his time into them it strains the budget. He bills out sometimes close to $200 / hr. But He also is the reincarnation of Mies so its justified.

We do much better margins on big residential or big comercial / retail where we get hourly or flat fee - the key is big.

Some architects are simply not cut out to do small scale single family residential and should do everyone a service and stay out of it.

You can get 15% here in Chicago but the work has to be really good.

I like Rudolph's approach of linking fee to sq.ft instead of total cost. We should be in the business of creating value for clients and that means spending less where we can - that type of research and thinking shouldn't be rewarded with a smaller fee. Anyone else have any experience with this type of billing?

No - But I was thinking the same thing. For side jobs I always used published SF numbers and then added or subtracted as my gut said to. But thats for a one man operation. I really like his idea.

where did you find published SF numbers?

We proposed a $/sf contract once: once number for architecture, another for interior furnishings (furniture, decor and window treatments). We did not get that project. Our proposal was four years ago; just a few days ago I heard that person is STILL trying to finish their house with the second-rate design team they put together instead of us!

Get what you pay for, indeed. And yes, I'm gloating.

the one ive used is called "Fees" 2006 by guidelines of Alameda, CA

I like that it breaks down just about every job type, then low med high, architects fee total cost SF costs

They also give multipliers for what region your in - ie NE= .9 south=.85

Very simple starting point



link

Well we would never have proposed it, and generally wouldn't have accepted it either except that the client is truly exceptional in terms of openness to design and their approach to the project. For them I think it is more about being assured that the fee will not balloon with construction costs because they had a prior bad experience, rather than trying to be cheap.
They are going to save money in relation to a typical % billing (and our fees will be less), but I think it will result in less stress and suspicion overall. At the end of schematic design the sq.ft. and fee went up about 30% from the original proposal, and they had no problem paying. I think the connection between sq.ft. and cost is something a client can grasp much easier than value added by design, or fees being tied to amount of actual time spent on the work (I work for another architect as well as doing my own thing. She charges 17-18% and a lot of time is spent justifying to clients where our hours were spent, why they are being billed etc.).
I think the key to this working will be to see how good the clients are at making decisions. We had a lot of discussion about different types of billing and the process before we came ot this agreement, and we built in an understanding that a certain amount of help with fixtures, finishes etc. would be included but not unlimited. Same with different design schemes. We will probably not make as much profit as we have in the past with % billing on large residential projects, but I'm ok with it if it saves a lot of stress during bidding and billing towards the end of the project.
It remains to be seen how it will work in the end though...

We work on a percentage of construction in a tiered approach. Up to $2Mil is 15%, $2Mil to $3Mil is 14% and above $3Mil is 13%. This is for full service (interiors and shell). We also bump up Schematic Design to 20% of our fee and lower CA to 15% of our fee so that we front load our fee a little for projects that go on hold. So for a 15% fee without CA it would come out to basically 13% of construction cost.

In addition, any variances/wetlands/Arch review boards, etc is an additional service and billed hourly. If the project is big enough, I typically don't bill for this though.

We never hire any consultants (all consultants are contracted and paid for directly by the owner). This not only cleans up liability issues, but also I don't want to have to be involved in another businesses accounts receivable.

For larger projects, we will typically cap the construction cost at the GC's contract price plus a small contingency, so that the owner knows that as change orders happen our fee does not run up. For a change in scope we will bill hourly.

We also will do small jobs for past clients, or clients that are well connected in our target market. These jobs we bill hourly and don't really make money on them. We use these to help train interns at project management and because in a very short timeframe you can have a happy client in your referral network helping you get more work. In my experience, small work creates big work.

One concern of ours is that we'll be priced out of the market. We're going after small residential work, and some of our competitors are charging what amounts to 4%-5%. I'm not sure how they're making it on that, but suddenly ramping our fee up to 15% might be very detrimental to us.

What's been people's experience with competition and fees (i.e. competitors whose fees are set very low)?

"Well we would never have proposed it, and generally wouldn't have accepted it either except that..."

R.A., I'm glad you posted that. I think some of posters thought it sounded great to bill per the SF, and for reasons made absolutely no sense to me. Like you, I would definitely not agree to that kind of fee structure either.

Architects already are undercompensated on houses, man let's not make it even worse.

Has anyone done a savings split? If the total project comes in under budget it is split between architect/contractor/owner?

funny thing, i am at my local coffee shop, and there are two architects here meeting with a potential client, and they quoted her 10% of the construction costs. they are some local design firm, because i heard them talking about the Wee-House, so it's some trendy mid-mod-flatpacker-modular d00ds.

^is that it?

just posting to say that I'm bookmarking this thread, and to thank everyone for who is sharing details about contracts and fees. very informative.

hehe...i just talked to the woman meeting with those architects, and i gave her my business card. told her we could meet and talk more about what she wants to do, she's afraid of the 10% fee. here's to speaking up and not being a wallflower.

you vulture you

i know, i am such a bad man. in my defense though, i nearly talked to her yesterday, but in my conversation today it seems that she is still in the process of finding an architect. some have been helpful, others have been negligent in doing the simplest things - like calling her back, duh - so i tend to believe i am just taking advantage of a "potential" opportunity.

Beta - your are such a capitalist!

beta's a sniper...

It's not bad to seize an opportunity, though you don't want to get a reputation as a poacher. This is the way we play a situation where a potential client is talking to another designer: talk about our strengths but NEVER about the other designer's weaknesses. We usually say something slightly complimentary yet innocuous like "I don't like everything Joe Bob has done, but that one house on Oak Street does have a nice entry.". And, it has to be honest. People can tell when you're blowing smoke - either about your own abilities or the lack of talent of another - so just speak honestly. You don't want to sound pissy.

elle, good points, in fact the good thing about this is that i am not familiar with the firm, so what i talked about was how to reduce costs by exploiting materials that are traditionally thought of as "low" and raising them to a "high" finish by detailing. i also explained that although "simple" is great thing to aspire to, it does not necessarily mean cheaper. that sometimes simple costs more, because it requires rigorous detailing, and constant management through the construction process.

i hear you on the poaching. that's why i probed first; asked who the architects were, and let her tell me about her process/story and when i saw that she was still trying to find an architect to do the design, i then handed her my card, and put in my story.

i don't want to be that guy, but i want to be bold, and day by day i am getting bolder...

oh, this out of work architect, needs work - badly.

tyvek,

um, hiring?

abra, was that you standing next to me?

Unfortunately I am not hiring. I really wish that I could (and have been trying to get enough work lined up to be able to) because the quality of resumes that I am seeing are very high right now and it would be a great time to fill out my staff with some quality people. We are pretty conservative, so we only hire when we know that we will not have to turn around and lay someone off in a few months if things turn worse.

The market (we do mostly residential work), at least for me, is so uncertain. Even when I get a project, the owners are so skiddish (on average) that the projects aren't flowing through the design phases in a predictable way. Right now we seem to be getting back to being scrappy about work and how we are going to make enough fees to keep the lights on each month. Although frustrating, getting back to being scrappy is a good thing as well.

But, who knows...maybe there will be a call from a new potential client for some big work at my desk this morning and then I would seriously think about hiring.

here's a tangential question for all or some of you. when you are making the step into starting your own firm, what techniques did you employ to get new work, assuming that you did not have anything other than work done for previous firms to show?