I've got a client who, after seeing three bids come in 100k over his 450k budget.
His rationale for not paying is that since he can't afford to build the project, the drawings are useless to him.
I offered to get another bid for him, and then if it still came in too high, I offered to 'value engineer' the project to lower the cost and hopefully get it closer to his budget.
Fortunately, I do have a signed contract with the client, and nothing in the contract says anything about guaranteeing him that the project will meet his 450K budget, or any budget for that matter.
I've never had to sue anyone, but am thinking I may not have a choice here. The balance due from the client is 9K. For me, it's a lot of money that I really can't afford to walk away from.
Has anyone been in a similar situation? And if so, do you have advice on how to proceed from here? I haven't yet responded to the client, since he emailed me that he wasn't paying, so feel like I need to choose my words carefully, and do it in writing.
Any advice would be appreciated.
Thanks
Non Sequitur
Oct 23, 24 8:29 am
Lawyer time.
Services were provided.
poop876
Oct 23, 24 8:50 am
Take him to court. There is no reason why he should not be paying. I've had numerous clients such as yours using the same lame excuse.
Typically if I'm in similar situation, I send a certified letter stating that if no payment is made within (time period) other steps will be made to collect the fee for services rendered and include the signed contract with that letter.
mookey
Oct 23, 24 9:14 pm
Thanks for the advice! Since I didn't reply to the client's text, he followed up with a call to me and left a voicemail basically saying the same thing he said in his text. I guess I could call him back, but am thinking any correspondence here on out should have a paper trail. I like your idea to send him a certified letter. I'm thinking of offering to drop 1K from the fee if he pays the balance (8K) within 2 weeks, otherwise I'll "take further action". Do you think I should specify what the "further action" entails or keep it vague? I don't actually know what my next move would be. I'd like to avoid a law suit if possible, so maybe I send a collections agency to his door? Or someone also suggested I put a Lien on his property. I am so glad I have a signed contract. In the past,
there have been times when I went with just a handshake. Never again...
poop876
Oct 24, 24 8:06 am
No, don't offer to reduce down your fee. It's your time and your earned money. Let him come back with an offer but as you mentioned he is not willing to pay at all. I would send a letter stating what he owns and give him 30 days to pay full as per his contractual obligation and attach the contract that he signed. Don't threaten with a lawsuit but I would leave it so he guesses what it is and how you'd collect, or vague as you said. We've sent smaller invoices to collections and that causes headaches to the client and they really try to avoid that. However, you also have the risk them filing a lawsuit against you. As far as lien, that all depends on your location and what kind of projects it is. Typically residential and federal or state projects are exempt.
reallynotmyname
Oct 24, 24 4:26 pm
Assuming the OP is (for whatever reason) ok with making some financial concessions to save the project, they should look at working with the lowest responsible construction bidder on VE changes to get the price down by the needed 22%. This is, of course, assuming that the design is not already the cheapest thing possible at $550K.
poop876
Oct 23, 24 9:32 am
Also, not sure what kind of project this is and what your location is, but in some states architects have lien rights so you could put a lien on his property.
gwharton
Oct 23, 24 1:08 pm
This is a highly-effective tactic, if you are in a state which allows it.
mookey
Oct 23, 24 9:14 pm
Oh, right, it was you who
suggested the lien! Thanks!
Wood Guy
Oct 23, 24 9:42 am
I don't have advice for your current situation, but having gone through that as well, in three different places in my contract I added language that says I can't design to a specific budget. I do include the "target budget" but label it as such, and have one of the disclaimers directly following.
I still occasionally get clients who think I should be able to meet their budget. The most recent, earlier this year, is an attorney. Along with his complaint, he noted that I "cleverly absolved" myself from meeting budgets. Yup--that's why that language is there, and I discuss it at some length before we sign a contract.
bowling_ball
Oct 23, 24 10:06 am
Yeah we've experienced similar fuckery, with a lawyer client no less. Dude, we have a contract. When we told him that if he didn't pay up, we'd go out of business and wouldn't be able to fulfill our part of the contract. After six months of bullshit, the cheque showed up the next day. We've fired them as clients but still have about $2M in fees rehoming
bowling_ball
Oct 23, 24 10:07 am
*in fees still remaining in our contracts, so we can't just walk away
mookey
Oct 23, 24 9:17 pm
Thanks, great idea to put specific language in the contract about not guaranteeing a specific budget. Hopefully, since I have no verbiage in my contract that says anything about providing estimates or a budget, that will absolve me...
archanonymous
Oct 23, 24 12:57 pm
Given that your username is mookey, I'm sure you can get cousin frankie and big jimmie to go pay him a visit and apply a little - persuasion - if you get my drift.
mookey
Oct 23, 24 9:18 pm
Haha, I wish I had relatives and
friends like that!
b3tadine[sutures]
Oct 24, 24 4:06 pm
I'll do it.
OddArchitect
Oct 29, 24 10:42 am
I will also do it.
Le Courvoisier
Oct 23, 24 2:07 pm
Honestly, archanonymous isn't wrong. You'll probably spend more to get the 9k unless it's a very open and shut case in small claims court (sounds like it could be)
archanonymous
Oct 24, 24 6:59 am
Without resorting to violence, social pressure is probably going to be as effective and much cheaper than a lwayer. Once you've turned the client's grandma against him, it's only a matter of time before he pays.
reallynotmyname
Oct 24, 24 4:35 pm
Lots shady owners know that they can pocket free money by stiffing people on smaller invoices. Invoices where the architect's cost to recover via legal action will probably exceed the amount of the invoice. It's usually the last invoice at the end of a project.
OddArchitect
Oct 29, 24 10:43 am
As part of the suite you include legal fees and court costs.
JLC-1
Oct 23, 24 2:09 pm
Is this the cash paying dude?
graphemic
Oct 23, 24 5:37 pm
Has to be... I think some of us deserve a "we tried to warn you..."
mookey
Oct 23, 24 9:19 pm
Nope. I took the advice on that one!
graphemic
Oct 24, 24 12:41 pm
Oh that's awesome! Sorry to hear you're still in a bind, that sucks.
BluecornGroup
Oct 23, 24 4:33 pm
Architects really fail as businessmen or women (for the most part) like many of my professional artist friends - as an A/E service business you shouldn't shadow finance other parties - this needs to be structured as a pay-as-you-go (30 day disbursement schedule) agreement with a final payment before you release the final sealed CD set - just finished a commercial garage where the owners had no problem with a two page contract without all the AIA or other standard form legalese - I require a 50% retainer which protects me - I have the owners sign contracts with the consulting engineers and surveyor who will not release their sheets until final payment is made - I have never had an owner not pay me or a consulting engineer to date - financially protect yourself and your firm - many times a court judgement is worth the paper its written on and you must pay your lawyer's fee ...
mookey
Oct 23, 24 9:21 pm
Thanks. Good advice going forward.
pj_heavy
Oct 23, 24 9:27 pm
payment dispute has
poop876
Oct 24, 24 1:41 pm
Retainer on a garage is a little different than a retainer on a multi million dollar development.
bennyc
Oct 24, 24 2:40 pm
No contract for architectural services? unreal. You deserve to be played with for 9k.
unreal the amount of stupid architects out there.
BluecornGroup
Oct 24, 24 3:14 pm
and some are real arrogant assholes...
reallynotmyname
Oct 24, 24 4:30 pm
OP stated at the top of the post that they did have a contract for this one.
Wood Guy
Oct 24, 24 5:22 pm
Unreal that some posters here don't bother to read the original post carefully... ;-)
A real estate investor/teacher, Rod Kleif, says that there are no mistakes, only seminars. Some seminars are very expensive. It's up to you whether you learn from them.
bennyc
Oct 26, 24 11:16 am
Misread
that, but still just as bad, not having a payment schedule or releasing bid drawings without getting paid. File a mechanics lien on client.
BluecornGroup
Oct 24, 24 3:13 pm
Does anyone think business ethics and management principles should be part of the curriculum? - I went to the Institute of American Indian Arts in Santa Fe and you had to take the Business Principles course to graduate - at UNM an architect that was also an attorney taught Architectural & Construction Law as an elective with a full classroom - a few of my architect friends have MBA's - for some strange reason they understand an architectural enterprise is a business at its core ...
poop876
Oct 24, 24 4:37 pm
Most schools do have it part of the curriculum...or at least I thought so. Those courses were very interesting and helpful.
reallynotmyname
Oct 24, 24 4:54 pm
All NAAB-accredited programs in the US are required to have a one-semester practice course in the curriculum. The quality of the instruction and content varies widely. My school considered it an "uncool" subject and it was taught by some adjunct person that came to campus for one hour a week to teach the course.
Non Sequitur
Oct 24, 24 5:02 pm
Both my undergrad and grad schools had business classes built into their arch courses. Not every student took them seriously but that's their problem. I loved those classes and their content certainly is worth far more than knowing how to make shiny renderings.
bowling_ball
Oct 25, 24 12:05 am
I've actually hired my former professional practice prof as a consultant to my firm, to analyse our business plan, financials, etc. He's now set up his own firm to do this.
graphemic
Oct 25, 24 1:04 pm
I'd really like to teach pro prac courses. So important.
Josh Mings
Oct 25, 24 3:22 pm
I have a business advisor for this, and it is so damn helpful. He focuses on architecture firms too.
JKA-LA
Oct 24, 24 7:18 pm
You should invoice your client regularly with clear payment terms, so that your invoices and subsequent work performed in the payment timeframe are proportionate to the retainer you've collected at the start of the project. That way you are never going to be extending yourself too far out on a limb with uncompensated services.
In this example, if you're clearly in the right and performed your services within standard of care, I would send that letter and state you will seek your fees owed plus interest, plus any attorney fees and court expenses.
bennyc
Oct 25, 24 5:07 am
letting yourself not get paid or not being paid on time, or releasing drawing for pricing before getting paid in full is as bad as not having a contract.
sameolddoctor
Oct 25, 24 5:47 pm
91k fee on a 450k build is quite nice, though. Is this normal?
That said, if your agreed fee was 100k, you should do everything to get it.
bowling_ball
Oct 25, 24 6:30 pm
Huh? Where are you getting that number?
sameolddoctor
Oct 25, 24 7:32 pm
Oh I misread the OPs post - I was like "take the 91k and shut up lol"
Richard Balkins
Oct 26, 24 10:59 am
The 100K refers to the bids coming in at $550+K when the budget for the project is $450K. The OP didn't state what his or her fee is in total. The OP only refers to the client not paying the $9K remainder of the fees for the services render but didn't tell us the total on that. I have some concerns on the OP's part. What mistake did the OP make? Did the OP design the project around $450K construction cost & labor instead of $200K to $225K for construction cost & labor.
The most common mistake architects and designers make is not being clear about whether the $450K is the the project's total budget or is that their construction cost budget. Sometimes clients don't know the difference so you need to ask questions to verify that by asking clients to be clear, is this their total amount for the project after explaining the difference. Typically, construction cost and labor is around 2/3 of the project cost. Around 1/3 is contractor overhead & profit, misc. project costs, and the professional design/engineering services fee. These are approximates.
When you design, you really do need to design around 50% of the project budget (the budget for entire project cost) so there is room for contingency and account for those things like overhead & profit, misc. project expenses like permits, inspection fees, etc. and design/engineering fees all within the budget the client gives. When you ask their budget, it often is their total budget for everything... not a penny more. Don't assume they have more or willing to pay more.
When calculating construction costs, use regular / MSRP price not any reduced prices they may be able to get the construction materials and use prevailing wage for labor rate and use normal hours for doing construction of similar scope of work and add 25% to the hours. If you are going to be conservative with the design cost to assure you would likely not blow the budget, you aim around $150K-$165K for construction material and labor. The better you understand the construction side of things and the time it actually takes, you can be more accurate Material cost is easy. You can do quantity with an extra volume of material as needed (normal construction waste to be accounted for) and use non-sale price for material. Wood studs can be estimated based on local prices for the material at no reduction assuming the contractors will likely get the stuff for below that (sales, bulk savings, contractor discount pricing) but can't assume they'll pass that savings to the client. I think there is likely something along this case occurred and that is why the project estimate came in above the $450K.
Richard Balkins
Oct 26, 24 11:33 am
To me, it seems, this overage could have been avoided even early on and vigilance in keeping the project cost from creeping larger and larger. Have the frank reality check with the client and make estimates. If construction material alone is $200K, the labor costs would be taking that up to a higher amount. Depending on the project, the labor can be 20-60% of the combined construction material and labor cost. Then you need to multiply the combined material and labor by 1.5x to arrive at likely ballpark figure for project but budget should be 2x to 2.25x the combined material and labor to allow for a little bit of contingency over the whole project. When you see construction material costs in your estimation exceeding 2/3 of the portion the portion of the budget for combined material & labor cost (which in this case should be 40-50% of your client's budget.. safer to aim at 40% in early estimates because you are likely to miss some important costs that a more accurate construction estimate would be from a construction professional), you should at least be on "yellow alert" and be cautious and keep your client on alert to not be adding to construction costs in their decisions.
You need to be frank, forthright, and candid. You don't want to tell your clients that everything is okay when they are approaching the line. On a project budget of $450K, you'd probably want to keep material costs from exceeding $120K. At least throughout much of the design phase.
You should not let client's creep the cost throughout the design and be financially conservative with any project under $650K... some may argue any project for that matter. You also need to be provided proof the client could even afford the project by having the money secured and not just pre-approved. The client should have in cash in their account(s) available to be put to the project equaling at least 20% of the project cost. If they are relying on lending and other sources, they will likely only lend up to 80%. The traditional 80/20 rule because you are expected to put some of your own money into your project. No one is eager to underwrite your entire project cost. They'll take your estimate and they may do their own and usually if it comes to around the same, they'll likely give you up to 80% of the lesser between your estimate and their own estimate on the design. So your client should have 20%-40% of the project cost already in cash on the side, at the very least. If they don't, the project is not feasible and you should not proceed with design services.
The first thing you need to do besides getting the project criteria is to do an early, pre-design... feasibility analysis to see if this is even remotely feasible. If the client isn't even close, then it isn't worth proceeding to design and doing any more effort until they get their financial shit in order.
smaarch
Oct 25, 24 10:34 pm
9K? yea not pocket change but you would serve yourself better by spending your time and energy getting new client. Hiring an attorney to take this to court is a no win in my humble opinion. Once got burnt by a municipality over copyright issues. Stewed for a few years and I had to put it to rest. Called an Attorney in Washington Dc who specialized in intellectual property law. We spoke for a couple of months. I recall the last conversation very well. Yep you have grounds for a lawsuit. How long will it take, what's it worth, and what will it cost? A decade, a couple of million, a few more million. Okay we are done. Time to move on. You can always call an attorney to understand the legal foundation before you make a decision to go after this guy. A good attorney will tell you where you stand, and worth their weight in gold. That said: the worst client I ever had was a snake of a criminal attorney.
pj_heavy
Oct 27, 24 7:10 pm
Any contract worth its salt would have an agreed clause between the client and architect re: initial/ estimated ‘ cost of works’ budget . The OP stated that this was not the case, which in some ways is a good thing in this case.( strangely) . Regardless of the 20% over budget ( which is substantial) the OP should be fully paid, period.
Richard Balkins
Oct 28, 24 2:25 am
I am not saying the OP shouldn't be paid but however should be paid depends on if the OP performed in accordance with professional standard of care what was performed. That is the part that I have in question. My point is the OP should have detected this overage by early if he approached design properly and scaled the project to budget or just in a forthright manner, inform the client that the project can not be performed, realistically within the budget per criteria and needs to be adjusted in order to fit within budget. I clearly see a possible situation where the client was assuming the budget for construction cost was $450K not the total project cost budget. Errors or Omissions which this would actually fall under could be grounds for the client to not pay all because complete pay would require the professional to complete the service and performed in accordance with professional standard of care.
Yes, I could be mistaken because of the limited detail but I am talking of the possibility where the OP screwed up on a very material point like not asking the client the right question and being A) clear that the client understands what the question is, and B) clear about what the client's budget is, actually. You need to be absolutely sure what the budget is that the client is giving not just dollar amount but whether that dollar amount is total budget or estimate for construction cost budget. You need to know these are two different things that can amount to serious impact on the project. These numbers guides your decision. If the OP knew the $450K was the TOTAL project budget, the OP might have made different decisions. You offer $__________ for service, it implies you perform all the service in that scope and did so in accordance with standard of care. This is the part that is still raising concern on my part. That can be grounds where the OP doesn't get paid for everything.
Sometimes you take it up the ass if you make mistakes. That's the way it is. You don't fuck up along the way and get paid in full because you didn't deliver in accordance to reasonable public expectation. Professional standard of care is to verify... verify... verify the information the client provides.
Be sure they understood or is clear about their budget information. If you neglect to do this and assume the client's budget info provided is just for construction material & labor, the bid can easily come in 20%+ the budget. Clients can not be assumed to understand the difference because they are often confused about the terminology used. If I don't know, I would caution to err on the side of conservative and assume the client's budget if for total project costs and determine how much to allocate towards construction material & labor.
Wilma Buttfit
Oct 28, 24 2:11 pm
Richard, you need to stop impersonating professionals online. If someone "screwed up", they get a chance to fix it. The cost is a function of what the architect designs, sure, but more importantly it is a function of what the client asked for. The client should look to rebid or reduce scope or quality to lower cost. Too many clients wanting all their dreams to come true for pennies.
Richard Balkins
Oct 28, 24 4:33 pm
I'm not impersonating professionals because building designers are professionals, TOO! Licensure is not a requirement to be professionals. However, the error I am talking as a potential error is something that should have been A) detected in programming or schematic design phase. You know, you should know PRECISELY what the client budget indicated covers before you even enter into a written contract. You should know at time of entering into an contract with a client to provide service what the client's total project budget as in how much money they have in total secured and allocated to the project before you draw ONE SINGLE LINE.
From that, you set the total mount for proposed design's construction material & labor, contractor overhead & profit and services along with misc. fees and such for a target price point for the entire project to 75% of the budget leaving 25% of the allocated budget as contingency. This means you should be targeting the design to be within an estimated total project cost of $337,500 when the client's budget is $450,000. Which means your construction material & labor in your estimates as you design and refine the design to stay under $225,000. You make your design estimates for material around MSRP / non-sale price or otherwise non-discounted price. There would be zero percent chance that contractor's bids to be coming in over that amount when your detailed technical submissions are prepared and you were detailed and thorough in estimates and with the design at every single stage of refining the design from beginning of design to the technical submissions. Every change made, update the cost estimation.
Yes, they have a chance to correct it, its called DESIGN DEVELOPMENT and EVEN the CONSTRUCTION DOCUMENTATION phase. That is when you should have that nailed down. Not when you getting bids.
There should be close to zero percent chance any reputable contractor would come in over the budget if you scoped the project and cost control through the design at 25% below the amount allocated. If the criteria for the project could not even remotely be within these constraint parameters of safety margins from the budget, and would exceed the $450K that the client has for the project, you should have been alerting the client. This should have been clear during schematic design phase. How hard us that to figure out. Those times to correct those kinds of errors was before you start making the technical submissions for permits. If you follow procedures of design process and making estimations in these stages.
The point of DD phase that you are suppose to iterate as many times in refinement and corrections before making the final set. CD is basically the final version after all drafts have been made until everything is locked down and you included all notes about code, specifications, etc. Even in DD, you should be already making a materials/quantity list and figure that out when you prepare the final DD phase set. In other words, the design gets iteratively more detailed and more closer to the final construction documents. At that point, you should be already then with refinements and make corrections to design to be within the parameter margin. The construction cost with contractor overhead and profit should be within +/- 10 to 15% of $281,250 or fairly close to that. With your fees and the engineering consultants, you should be within 10-15% of $337,500 (plus or minus). This means, you should be within your client budget. Being over $475,000 should be practically impossible. The project being between $450,000 to $475,000 should be almost impossible as it is. Being $100,000 over on a project aimed around a $450,000 project total budget should not happen ever. 5% over budget for this kind of project is within reason. It is your procedures that you use and price point where you start your design around. If you start design around a construction material & labor cost estimate to be capped at $200,000, you should already be at a point that bids should never exceed $450,000 from competent and reputable contractors. This also means that you don't go down a process of designing and onto construction documentation phase and sometimes even earlier stages of the processes of delivering services.
Being forthright and candid with the client at all times from initial consultation throughout, this should never had happen at all. In fact, if the project was never going to be be feasible in the budget, you should have said outright we are not going to continue further down this design process unless either the client secures more money or the client changes the project scope parameter until it is feasible. If neither is acceptable to client, terminate contract of performing services and collect what you are owed up to that phase. Otherwise you lead the client on a primrose path to failure. Even an architect who had been a licensed architect since 1967 had told me that nearly 20 years ago. If you don't carry on responsibility and accountability for taking every diligent effort to design within and establish a realistic scope of work and criteria that is feasible.
You are suppose to be the professional... LEAD! Take charge and keep the client's wish lists from derailing the project. You might think being $100,000 over budget is just fine when your customary project's budget is $2M+. That may be fine but that $100,000 over budget on a project that is under $500K is not acceptable. If the client is just a person versus a corporation or a government, you can't just be so cavalier about the notion of going over budget.
Wilma, do you understand what I am talking about?
While there isn't necessarily a formal fiduciary responsibility, there is actually an informal quasi-fiduciary responsibility. This is established in court cases and past judicial rulings which has placed architects, building designers or any design professional (regardless of licensure requirements or not) to possess some limited form of fiduciary duty. Not quite like that of say... an accountant. In that you don't engage in a wanton disregard to financial parameters. As a professional, you know or reasonably would know that there is more expenses to a project than just the construction material and labor cost. You must plan for room sufficient to account for variability as well as contingency. You know there is inflation so you should account for it to some degree based on past trend, an average of the last 5 years in the project area would be a fair basis. You should consider that factor as an average inflation trend over project timeline including reasonable estimation of project construction including permit waiting period and all that stuff. You need to plan for this. This doesn't mean you owe a more detailed and involved fiduciary duty unless you create it in the contract which establishes it on a formal level.
You do, however, have inherent responsibility to propose solutions and lead clients to a successful outcome to the best of your ability by applying professional judgment and factoring in for these things you know exists with virtually every project. Hence, standard of care. Within the extent of standard of care, you should be endeavoring to design the project within the budget parameter. This is why there *MAY* be a potential issue where the client is not obligated to pay the OP if there is some pattern of errors throughout the design process that systematically put the project outside realistic and would have a duty to inform the client.
This should have been caught well before construction documentation / permit phase. Take note of the case precedence where some limited form of fiduciary duty exists due to the nature of the professional service that by nature arise from a relationship of trust, confidence, and reliance. They contract us on this very basis of trust, confidence, and reliance on our professional judgment and guidance due to our professional knowledge and skill in the subject matter that the client does not possess.
While you do not have a duty to provide the client with the most profitable option or least expensive option unless you establish that in contract, you do have, however a duty to take reasonable efforts to design within the budget, and know clearly where the outer boundaries of the budget is and design a solution to the best of your ability within that if possible under the given project criteria. If not, you make known to client and suggest the client to either increase their available secured funding for the project and thus increase the budget or make changes to the project criteria to a feasible option. The client ultimately makes the decisions on this but you need to professionally lead and advise them.
You are not absolutely free to disregard the budget. If you don't take some duty of care to the client's budget and be considerate of it in the design then you would be disserving the client. This is what I been talking about, here.
Richard Balkins
Oct 28, 24 4:46 pm
If the client has contracted a professional construction cost estimator, the architect or designer may forgo cost estimation but even then, should do some sanity check estimations as the design develops. Yes, if you use B101, you could, for example, have a clause where you redesign to being under budget without additional charge. However, you should have done every reasonable effort from the start to work the design of the project to be well likely to be under the budget and that the bids would most likely be under that level with very little likelihood of exceeding it at all at the bid level.
Wilma Buttfit
Oct 28, 24 5:40 pm
You don't know what happened and it's irresponsible for you to assume you did. And professional is not a word for anyone engaged in an occupation, it is reserved for those who undergo lengthy education and specialized training in a field where you're engaging in making decisions requiring discernment and judgment, NOT just doing a routine over and over again. Discernment and judgment are things you have never been able to demonstrate, in these forums at least. The accrediting body for professionals is the government, not a club with a test. I'm putting you back on ignore.
Richard Balkins
Oct 28, 24 5:47 pm
As a ballpark figure, on average for new construction like building a new house or the construction of an addition (the section that is the addition is usually around 55%-65% material and remainder is the labor. A gut and redo will likely be 50%-70% material and rest the labor (including the indirect costs and benefits and such). Historic preservation and remodels that preserves existing construction will likely be the inverse of that for new construction. Then you tack on the O&P which would be typically equal to a sum equal to around 10%-30% of the construction material and labor cost. design fees would be about 5% to 15% of the construction material & labor rate. A lot of times that may include the engineering consultants to the primary design professional. Then you have misc. costs (which can be from 5% to 20% added on top of the construction material and labor if you don't count buying property and that the property acquisition isn't part of the project) so when you think about how much percentage do you add to account for contractor O&P, the misc. expenses associated with the project and the design services fee, you can see it range from 20% (10%, 5%, 5%) to 65% (30%, 20%, 15%). In which case, you want the construction material & labor to probably be 30% to 40% of the project budget with contingency built in and incorporating inflation adjustments to the project over project design & construction timeline that is being considered. In some cases, you can dial that construction material & labor to around 45%-50% of the project budget.
Richard Balkins
Oct 28, 24 5:54 pm
If the client have to buy land, all the above should amount to 40%-70% of the project budget but often it between 55%-70% zone where the property acquisition total (including realtor/broker fees and all) would be around 1/3 the project cost give or take 5-10% (plus/minus). Sometimes buying property is very expensive so that can be an exceptional situation. This is just what normal statistical data would approximately support.
pj_heavy
Oct 28, 24 7:38 pm
Gone fishing…brb
pj_heavy
Oct 29, 24 7:16 pm
" I am not saying the OP shouldn't be paid but however should be paid depends on if the OP performed in accordance with professional standard of care what was performed"
@Rick , this statement is wrong / i wont bother reading the rest of what you wrote.
However , if the client is able to prove that this is a " professional negligence" which caused their loss or damage... they can choose to take a legal option.
pj_heavy
Oct 29, 24 7:23 pm
Examples of architect negligence may include failing to:
Identify that a construction site was unfit for the intended design;
Provide a reasonable estimate of development costs;
Gain the required approvals for development;
Produce legally compliant plans or designs
I dont know why I bother , ... anyway
Richard Balkins
Oct 31, 24 11:58 am
True, but don't forget you have a project budget. You are a professional and what we do is construction design. We aren't making paintings to be hung on a wall in an art gallery. We are making design solutions for a project. We do in fact have a duty to intentionally design within the client's budget if they provide us the information. We have a duty to know and obtain information about the client's budget. We do have a duty to approach the project along a feasible path. If clients wants bullshit drawings not based in reality and feasibility, they'd just ask a 6 year old to make sketches.
As professionals, we need to be ACCOUNTABLE. If you are not accountable to your actions then you are not a professional. That is a key fundamental criteria of a profession being a profession is accountability. Clients rely on your EXPERT knowledge because you design buildings to be constructed day in and day out, 5+ days a week for upwards of 50 or so weeks a year (give or take for vacation and sick leave days). That's your job. They rely on YOU to make designs that meets their criteria and meet their budget. If criteria can not meet budget then either one of two things MUST happen... either the criteria for the design must change or the budget. As professionals, we need to know if the client has secured the funding to do so at least substantively.
If a client only has $20,000 and they want $20,000,000 project, how is that even a remote chance of them even doing. No point in going through the design process with them. That's mostly a business decision whether to even have the person as a client. If they have only $200,000 and can't get to say the $450,000 budget, you need to know and need to inquire where they really at because they might not even be there. Now this is less the issue in the OP's case.
In general, you can't assume the client is going to be able to just bump up the project budget to say, $650,000. For every dollar of overage, the budget would need to be increased by at least $2.
Now, throughout design process, we would be doing a multitude of cost estimation opinions based at first on concept estimation or something like that. Then as the design revises, we use either unit cost or quantity-takeoff estimation and recomputing those and reconciling for missing information with contingency with a larger contingency at the beginning and dialing that in as the design refines with more detail.
Along the process, you may need to make changes to adjust the cost down. All of that should be done BEFORE the contractors' bid estimates. There is also why the requisite safety margin what the design estimate costs would be and the total budget.
If you are not informing the client throughout the rendering of services whenever the project cost is likely to fall into the "danger zone" of going over budget, you are being a disservice to the client and that could be negligence. You said the client needs to prove that. Actually, it would be their lawyer!
Clients usually will involve a lawyer because if they are going to sue you, they are likely going to be withholding payment to you and using that to get the lawyer started.
OddArchitect
Oct 31, 24 12:16 pm
I'm going to regret this but - Richard, you are incorrect.
An architect only needs to design within reason to a clients budget.
We will design roughly to the clients budget. We will tell the client when we think their project is beyond their budget.
Unless specified by the client in the contract the architect is not responsible for creating an accurate cost estimate for the work. The owner is responsible for that.
The architect is required to reduce the project scope if the cost estimate for the work comes in over the client budget.
If the excess cost was due to client decisions and the architect informed the client of this then the architect needs to be paid for the additional service.
If not the clients 'fault' then the architect does this redesign for free.
When the cost estimate occurs depends on the project delivery method the client has chosen.
Wood Guy
Oct 31, 24 4:25 pm
Wilma, I didn't read anything Rick wrote but I did see you claim "professional" as being essentially for licensed pros only. That is incorrect.
Architects have successfully barred people like me, a residential designer with a ton of experience, the same insurance as my licensed peers and deeper/broader knowledge than many of them, from being able to use the term "architecture" or any derivative in any form, ever.
But I am indeed a "design professional." It's what my insurance says, it's what code offices ask for and have told me explicitly that I'm included, and there are even groups comparable to the AIA that provide testing and certificates if you want to prove that you know what you're doing. Until the AIA or some other organization limits the word "professional" further than it already is, both Rick and I are indeed design professionals.
OddArchitect
Oct 31, 24 5:06 pm
Wilma Buttfit wrote:
"You don't know what happened and it's irresponsible for you to assume you did. And professional is not a word for anyone engaged in an occupation, it is reserved for those who undergo lengthy education and specialized training in a field where you're engaging in making decisions requiring discernment and judgment, NOT just doing a routine over and over again. Discernment and judgment are things you have never been able to demonstrate, in these forums at least. The accrediting body for professionals is the government, not a club with a test. I'm putting you back on ignore."
I apologize for my language but the bolded part of your statement is bullshit.
Richard Balkins
Oct 31, 24 5:59 pm
OddArchitect,
I didn't mean the estimates have to be contractor level of accurate but that it should be reasonably within budget as you said but that can be done by prudent level of detail in estimation as closely as possible with methods similar to that contractor's use as you go through refinement.
Richard Balkins
Oct 31, 24 6:07 pm
The more accurate or less BS it is. You can do enough that you aren't planning the entire client's budget just on construction material cost alone. That would certainly result in a project exceeding the client's budget 100% of the time.
Richard Balkins
Oct 31, 24 6:25 pm
Bottom Line: My point is that accuracy relative that the professional opinion is sufficiently accurate enough that you can make corrective measures in design decisions early on and throughout and that the estimates aren't total b.s. where it is somewhat grounded in the real world. I know we went on a bit on this but my point at the beginning was that there *MAY* be a potential issue where there could be sufficient errors or omission in the design process and in estimating or lack of estimating or not having the correct basis understood of what the project budget is. This COULD be a basis where the client doesn't pay. The OP appear to indicate somewhat what the project delivery method is or the ones it could be but it is still not perfectly clear.
Richard Balkins
Oct 31, 24 6:31 pm
"You don't know what happened and it's irresponsible for you to assume you did. And professional is not a word for anyone engaged in an occupation, it is reserved for those who undergo lengthy education and specialized training in a field where you're engaging in making decisions requiring discernment and judgment, NOT just doing a routine over and over again. Discernment and judgment are things you have never been able to demonstrate, in these forums at least. The accrediting body for professionals is the government, not a club with a test. I'm putting you back on ignore."
Wilma...wilma...wilma...
It is illegal and unconstitutional for states to regulate and control common words like professional or even design professional in that fashion. States may adopt laws that defines the word professional or design professional to specify the intended scope of those words when used in a body of law like a chapter of a state's statutory law or a regulation like building codes. Aside from that, it is illegal to regulate the word professional. Referring to the part in bold.
The part in italics, you realize the reason the AIA isn't administering the licensure exam is a concern that state government offloading licensing process to one singular private organization would violate the antitrust laws. Additionally, they were concern that the 10th Amendment provision for "police powers" of the state can not go to private organization especially when you factor in "practice act" into it. Professional certifications of professionals exists for a long time.
Richard Balkins
Oct 31, 24 8:17 pm
Okay, its a little more involved in the decision regarding why it went to being a state licensing board versus private entities such as AIA being the "licensing" regulator.
As for the word "professional", that's a common word that can't be regulated. "Design" in the combination of two words "design professional" is simply grammatical way of defining what kind of professional like the word "building" in "building designer" is to indicate what kind of designer the designer is. Same idea.
Wilma Buttfit
Nov 1, 24 8:40 am
I deeply regret my involvement in this discussion and don't care to argue. IBC defines design professional as one who is registered or licensed by the jurisdiction. Which is exactly what I said. Furthermore, my state and many others have practice acts that define building design and who is qualified to do it. Don't hate on me, it's not my opinion.
OddArchitect
Nov 1, 24 10:27 am
It is your opinion that a person cannot be a professional without 'lengthy education and specialized training'. Furthermore - the IBC has no influence on what is a professional. A professional is a person engaged or qualified in a profession and abides by a standard of care / ethics. That doesn't require a license.
Finally - requirements that define who can design what types of buildings has nothing do with a definition of a professional. There are plenty of architects who are professionals and not allowed to design certain types of buildings in certain areas. Just like there are plenty of architects who are not professionals. I know plenty of professionals who are not architects.
Wilma Buttfit
Nov 1, 24 10:42 am
Not sure what we are arguing here. Professional as in doing something for a living is not the same as a member of a regulated profession. Professions are those such as law, engineering and architecture that over years gained this designation in the public eyes. As for the building department and IBC, it is relevant, why is it not? IBC is adopted as law unless they strike out that definition. Building officials should not be using other definitions. We are here because I originally said I don't like that Richard presents himself as an architect and he isn't one. And he is not contributing to this discussion but is distracting from it.
OddArchitect
Nov 1, 24 10:52 am
Wilma Buttfit
You can be a professional without a license. You can have a license and not be a professional. How is this hard for you to understand?
What you're describing / arguing is a 'licensed professional'.
Richard Balkins
Nov 1, 24 11:09 am
Wilma, FYI: The current edition of IBC (2024) definition is for REGISTERED DESIGN PROFESSIONAL and maybe listed as DESIGN PROFESSIONAL, REGISTERED and DESIGN PROFESSIONAL OF RESPONSIBLE CHARGE, REGISTERED. This change had been implemented in IBC 2021 and maybe IBC 2018. Lets say it has been implemented for awhile. This is because in the code sections, they are referring to instances where a REGISTERED DESIGN PROFESSIONAL is required. ICC change on this front is a passive way ICC is recognizing there are other design professionals that are simply not regulated by licensing laws but do not yet need to explicitly define it in the code because the code is simply indicating instances where a registered design professional is required. When a registered design professional is not required, a non-registered / non-licensed design professional or otherwise any person under the exemption may do. So read that chapter 2, again.
Richard Balkins
Nov 1, 24 11:19 am
Wilma,
How am I presenting myself or claiming myself to be an Architect with regards to this discussion or others?
FYI: Statutory definition is a state law is for defining the meaning of the word as USED in the statutory text to define the intended meaning of the word as used. In other words, codify the legislative intent and scope of the meaning of a word that otherwise may have broader meaning.
I'm sorry, the English or American English is not regulated by some government entity. The word is define in dictionaries and spans centuries. Learn the etymology and history of the word professional and you'll realize your definition is wrong but is accurate to what OddArchitect said --- "LICENSED PROFESSIONAL". Full cap & bold emphasis by me.
Richard Balkins
Nov 1, 24 11:23 am
Aside from being a building design professional (building designer), I am also a professional ASSHOLE. Thank you very much and now go fuck off Wilma.... can't make myself a liar about being a professional asshole, right?
In the states where I do projects, there are projects that I do that falls under both codes. This is due to the exemption in my state isn't exclusive to residential that would fall under IRC. In Washington, I may design multi-family residential projects with up to 4 units. That may fall under IBC instead of IRC. The laws where I do projects govern what I may perform services with regards. Any "non-exempt project" may be essentially an interior design services type contract which is a service that is provided out of the array of services offered and performed.
Le Courvoisier
Nov 1, 24 11:15 am
Licensed Professionals
Design Professionals (honestly, Wood Guy with what you do, I don't care if you're not licensed you're an architect to me)
Hi everyone.
I'm looking for advice on a contentious issue.
I've got a client who, after seeing three bids come in 100k over his 450k budget.
His rationale for not paying is that since he can't afford to build the project, the drawings are useless to him.
I offered to get another bid for him, and then if it still came in too high, I offered to 'value engineer' the project to lower the cost and hopefully get it closer to his budget.
Fortunately, I do have a signed contract with the client, and nothing in the contract says anything about guaranteeing him that the project will meet his 450K budget, or any budget for that matter.
I've never had to sue anyone, but am thinking I may not have a choice here. The balance due from the client is 9K. For me, it's a lot of money that I really can't afford to walk away from.
Has anyone been in a similar situation? And if so, do you have advice on how to proceed from here? I haven't yet responded to the client, since he emailed me that he wasn't paying, so feel like I need to choose my words carefully, and do it in writing.
Any advice would be appreciated.
Thanks
Lawyer time.
Services were provided.
Take him to court. There is no reason why he should not be paying. I've had numerous clients such as yours using the same lame excuse.
Typically if I'm in similar situation, I send a certified letter stating that if no payment is made within (time period) other steps will be made to collect the fee for services rendered and include the signed contract with that letter.
Thanks for the advice! Since I didn't reply to the client's text, he followed up with a call to me and left a voicemail basically saying the same thing he said in his text. I guess I could call him back, but am thinking any correspondence here on out should have a paper trail. I like your idea to send him a certified letter. I'm thinking of offering to drop 1K from the fee if he pays the balance (8K) within 2 weeks, otherwise I'll "take further action". Do you think I should specify what the "further action" entails or keep it vague? I don't actually know what my next move would be. I'd like to avoid a law suit if possible, so maybe I send a collections agency to his door? Or someone also suggested I put a Lien on his property. I am so glad I have a signed contract. In the past, there have been times when I went with just a handshake. Never again...
No, don't offer to reduce down your fee. It's your time and your earned money. Let him come back with an offer but as you mentioned he is not willing to pay at all. I would send a letter stating what he owns and give him 30 days to pay full as per his contractual obligation and attach the contract that he signed. Don't threaten with a lawsuit but I would leave it so he guesses what it is and how you'd collect, or vague as you said. We've sent smaller invoices to collections and that causes headaches to the client and they really try to avoid that. However, you also have the risk them filing a lawsuit against you. As far as lien, that all depends on your location and what kind of projects it is. Typically residential and federal or state projects are exempt.
Assuming the OP is (for whatever reason) ok with making some financial concessions to save the project, they should look at working with the lowest responsible construction bidder on VE changes to get the price down by the needed 22%. This is, of course, assuming that the design is not already the cheapest thing possible at $550K.
Also, not sure what kind of project this is and what your location is, but in some states architects have lien rights so you could put a lien on his property.
This is a highly-effective tactic, if you are in a state which allows it.
Oh, right, it was you who suggested the lien! Thanks!
I don't have advice for your current situation, but having gone through that as well, in three different places in my contract I added language that says I can't design to a specific budget. I do include the "target budget" but label it as such, and have one of the disclaimers directly following.
I still occasionally get clients who think I should be able to meet their budget. The most recent, earlier this year, is an attorney. Along with his complaint, he noted that I "cleverly absolved" myself from meeting budgets. Yup--that's why that language is there, and I discuss it at some length before we sign a contract.
Yeah we've experienced similar fuckery, with a lawyer client no less. Dude, we have a contract. When we told him that if he didn't pay up, we'd go out of business and wouldn't be able to fulfill our part of the contract. After six months of bullshit, the cheque showed up the next day. We've fired them as clients but still have about $2M in fees rehoming
*in fees still remaining in our contracts, so we can't just walk away
Thanks, great idea to put specific language in the contract about not guaranteeing a specific budget. Hopefully, since I have no verbiage in my contract that says anything about providing estimates or a budget, that will absolve me...
Given that your username is mookey, I'm sure you can get cousin frankie and big jimmie to go pay him a visit and apply a little - persuasion - if you get my drift.
Haha, I wish I had relatives and friends like that!
I'll do it.
I will also do it.
Honestly, archanonymous isn't wrong. You'll probably spend more to get the 9k unless it's a very open and shut case in small claims court (sounds like it could be)
Without resorting to violence, social pressure is probably going to be as effective and much cheaper than a lwayer. Once you've turned the client's grandma against him, it's only a matter of time before he pays.
Lots shady owners know that they can pocket free money by stiffing people on smaller invoices. Invoices where the architect's cost to recover via legal action will probably exceed the amount of the invoice. It's usually the last invoice at the end of a project.
As part of the suite you include legal fees and court costs.
Is this the cash paying dude?
Has to be... I think some of us deserve a "we tried to warn you..."
Nope. I took the advice on that one!
Oh that's awesome! Sorry to hear you're still in a bind, that sucks.
Architects really fail as businessmen or women (for the most part) like many of my professional artist friends - as an A/E service business you shouldn't shadow finance other parties - this needs to be structured as a pay-as-you-go (30 day disbursement schedule) agreement with a final payment before you release the final sealed CD set - just finished a commercial garage where the owners had no problem with a two page contract without all the AIA or other standard form legalese - I require a 50% retainer which protects me - I have the owners sign contracts with the consulting engineers and surveyor who will not release their sheets until final payment is made - I have never had an owner not pay me or a consulting engineer to date - financially protect yourself and your firm - many times a court judgement is worth the paper its written on and you must pay your lawyer's fee ...
Thanks. Good advice going forward.
payment dispute has
Retainer on a garage is a little different than a retainer on a multi million dollar development.
No contract for architectural services? unreal. You deserve to be played with for 9k.
unreal the amount of stupid architects out there.
and some are real arrogant assholes...
OP stated at the top of the post that they did have a contract for this one.
Unreal that some posters here don't bother to read the original post carefully... ;-)
A real estate investor/teacher, Rod Kleif, says that there are no mistakes, only seminars. Some seminars are very expensive. It's up to you whether you learn from them.
Misread that, but still just as bad, not having a payment schedule or releasing bid drawings without getting paid. File a mechanics lien on client.
Does anyone think business ethics and management principles should be part of the curriculum? - I went to the Institute of American Indian Arts in Santa Fe and you had to take the Business Principles course to graduate - at UNM an architect that was also an attorney taught Architectural & Construction Law as an elective with a full classroom - a few of my architect friends have MBA's - for some strange reason they understand an architectural enterprise is a business at its core ...
Most schools do have it part of the curriculum...or at least I thought so. Those courses were very interesting and helpful.
All NAAB-accredited programs in the US are required to have a one-semester practice course in the curriculum. The quality of the instruction and content varies widely. My school considered it an "uncool" subject and it was taught by some adjunct person that came to campus for one hour a week to teach the course.
Both my undergrad and grad schools had business classes built into their arch courses. Not every student took them seriously but that's their problem. I loved those classes and their content certainly is worth far more than knowing how to make shiny renderings.
I've actually hired my former professional practice prof as a consultant to my firm, to analyse our business plan, financials, etc. He's now set up his own firm to do this.
I'd really like to teach pro prac courses. So important.
I have a business advisor for this, and it is so damn helpful. He focuses on architecture firms too.
You should invoice your client regularly with clear payment terms, so that your invoices and subsequent work performed in the payment timeframe are proportionate to the retainer you've collected at the start of the project. That way you are never going to be extending yourself too far out on a limb with uncompensated services.
In this example, if you're clearly in the right and performed your services within standard of care, I would send that letter and state you will seek your fees owed plus interest, plus any attorney fees and court expenses.
letting yourself not get paid or not being paid on time, or releasing drawing for pricing before getting paid in full is as bad as not having a contract.
91k fee on a 450k build is quite nice, though. Is this normal?
That said, if your agreed fee was 100k, you should do everything to get it.
Huh? Where are you getting that number?
Oh I misread the OPs post - I was like "take the 91k and shut up lol"
The 100K refers to the bids coming in at $550+K when the budget for the project is $450K. The OP didn't state what his or her fee is in total. The OP only refers to the client not paying the $9K remainder of the fees for the services render but didn't tell us the total on that. I have some concerns on the OP's part. What mistake did the OP make? Did the OP design the project around $450K construction cost & labor instead of $200K to $225K for construction cost & labor.
The most common mistake architects and designers make is not being clear about whether the $450K is the the project's total budget or is that their construction cost budget. Sometimes clients don't know the difference so you need to ask questions to verify that by asking clients to be clear, is this their total amount for the project after explaining the difference. Typically, construction cost and labor is around 2/3 of the project cost. Around 1/3 is contractor overhead & profit, misc. project costs, and the professional design/engineering services fee. These are approximates.
When you design, you really do need to design around 50% of the project budget (the budget for entire project cost) so there is room for contingency and account for those things like overhead & profit, misc. project expenses like permits, inspection fees, etc. and design/engineering fees all within the budget the client gives. When you ask their budget, it often is their total budget for everything... not a penny more. Don't assume they have more or willing to pay more.
When calculating construction costs, use regular / MSRP price not any reduced prices they may be able to get the construction materials and use prevailing wage for labor rate and use normal hours for doing construction of similar scope of work and add 25% to the hours. If you are going to be conservative with the design cost to assure you would likely not blow the budget, you aim around $150K-$165K for construction material and labor. The better you understand the construction side of things and the time it actually takes, you can be more accurate Material cost is easy. You can do quantity with an extra volume of material as needed (normal construction waste to be accounted for) and use non-sale price for material. Wood studs can be estimated based on local prices for the material at no reduction assuming the contractors will likely get the stuff for below that (sales, bulk savings, contractor discount pricing) but can't assume they'll pass that savings to the client. I think there is likely something along this case occurred and that is why the project estimate came in above the $450K.
To me, it seems, this overage could have been avoided even early on and vigilance in keeping the project cost from creeping larger and larger. Have the frank reality check with the client and make estimates. If construction material alone is $200K, the labor costs would be taking that up to a higher amount. Depending on the project, the labor can be 20-60% of the combined construction material and labor cost. Then you need to multiply the combined material and labor by 1.5x to arrive at likely ballpark figure for project but budget should be 2x to 2.25x the combined material and labor to allow for a little bit of contingency over the whole project. When you see construction material costs in your estimation exceeding 2/3 of the portion the portion of the budget for combined material & labor cost (which in this case should be 40-50% of your client's budget.. safer to aim at 40% in early estimates because you are likely to miss some important costs that a more accurate construction estimate would be from a construction professional), you should at least be on "yellow alert" and be cautious and keep your client on alert to not be adding to construction costs in their decisions.
You need to be frank, forthright, and candid. You don't want to tell your clients that everything is okay when they are approaching the line. On a project budget of $450K, you'd probably want to keep material costs from exceeding $120K. At least throughout much of the design phase.
You should not let client's creep the cost throughout the design and be financially conservative with any project under $650K... some may argue any project for that matter. You also need to be provided proof the client could even afford the project by having the money secured and not just pre-approved. The client should have in cash in their account(s) available to be put to the project equaling at least 20% of the project cost. If they are relying on lending and other sources, they will likely only lend up to 80%. The traditional 80/20 rule because you are expected to put some of your own money into your project. No one is eager to underwrite your entire project cost. They'll take your estimate and they may do their own and usually if it comes to around the same, they'll likely give you up to 80% of the lesser between your estimate and their own estimate on the design. So your client should have 20%-40% of the project cost already in cash on the side, at the very least. If they don't, the project is not feasible and you should not proceed with design services.
The first thing you need to do besides getting the project criteria is to do an early, pre-design... feasibility analysis to see if this is even remotely feasible. If the client isn't even close, then it isn't worth proceeding to design and doing any more effort until they get their financial shit in order.
9K? yea not pocket change but you would serve yourself better by spending your time and energy getting new client. Hiring an attorney to take this to court is a no win in my humble opinion.
Once got burnt by a municipality over copyright issues. Stewed for a few years and I had to put it to rest. Called an Attorney in Washington Dc who specialized in intellectual property law. We spoke for a couple of months. I recall the last conversation very well.
Yep you have grounds for a lawsuit.
How long will it take, what's it worth, and what will it cost?
A decade, a couple of million, a few more million.
Okay we are done. Time to move on.
You can always call an attorney to understand the legal foundation before you make a decision to go after this guy. A good attorney will tell you where you stand, and worth their weight in gold.
That said: the worst client I ever had was a snake of a criminal attorney.
Any contract worth its salt would have an agreed clause between the client and architect re: initial/ estimated ‘ cost of works’ budget . The OP stated that this was not the case, which in some ways is a good thing in this case.( strangely) . Regardless of the 20% over budget ( which is substantial) the OP should be fully paid, period.
I am not saying the OP shouldn't be paid but however should be paid depends on if the OP performed in accordance with professional standard of care what was performed. That is the part that I have in question. My point is the OP should have detected this overage by early if he approached design properly and scaled the project to budget or just in a forthright manner, inform the client that the project can not be performed, realistically within the budget per criteria and needs to be adjusted in order to fit within budget. I clearly see a possible situation where the client was assuming the budget for construction cost was $450K not the total project cost budget. Errors or Omissions which this would actually fall under could be grounds for the client to not pay all because complete pay would require the professional to complete the service and performed in accordance with professional standard of care.
Yes, I could be mistaken because of the limited detail but I am talking of the possibility where the OP screwed up on a very material point like not asking the client the right question and being A) clear that the client understands what the question is, and B) clear about what the client's budget is, actually. You need to be absolutely sure what the budget is that the client is giving not just dollar amount but whether that dollar amount is total budget or estimate for construction cost budget. You need to know these are two different things that can amount to serious impact on the project. These numbers guides your decision. If the OP knew the $450K was the TOTAL project budget, the OP might have made different decisions. You offer $__________ for service, it implies you perform all the service in that scope and did so in accordance with standard of care. This is the part that is still raising concern on my part. That can be grounds where the OP doesn't get paid for everything.
Sometimes you take it up the ass if you make mistakes. That's the way it is. You don't fuck up along the way and get paid in full because you didn't deliver in accordance to reasonable public expectation. Professional standard of care is to verify... verify... verify the information the client provides.
Be sure they understood or is clear about their budget information. If you neglect to do this and assume the client's budget info provided is just for construction material & labor, the bid can easily come in 20%+ the budget. Clients can not be assumed to understand the difference because they are often confused about the terminology used. If I don't know, I would caution to err on the side of conservative and assume the client's budget if for total project costs and determine how much to allocate towards construction material & labor.
Richard, you need to stop impersonating professionals online. If someone "screwed up", they get a chance to fix it. The cost is a function of what the architect designs, sure, but more importantly it is a function of what the client asked for. The client should look to rebid or reduce scope or quality to lower cost. Too many clients wanting all their dreams to come true for pennies.
I'm not impersonating professionals because building designers are professionals, TOO! Licensure is not a requirement to be professionals. However, the error I am talking as a potential error is something that should have been A) detected in programming or schematic design phase. You know, you should know PRECISELY what the client budget indicated covers before you even enter into a written contract. You should know at time of entering into an contract with a client to provide service what the client's total project budget as in how much money they have in total secured and allocated to the project before you draw ONE SINGLE LINE.
From that, you set the total mount for proposed design's construction material & labor, contractor overhead & profit and services along with misc. fees and such for a target price point for the entire project to 75% of the budget leaving 25% of the allocated budget as contingency. This means you should be targeting the design to be within an estimated total project cost of $337,500 when the client's budget is $450,000. Which means your construction material & labor in your estimates as you design and refine the design to stay under $225,000. You make your design estimates for material around MSRP / non-sale price or otherwise non-discounted price. There would be zero percent chance that contractor's bids to be coming in over that amount when your detailed technical submissions are prepared and you were detailed and thorough in estimates and with the design at every single stage of refining the design from beginning of design to the technical submissions. Every change made, update the cost estimation.
Yes, they have a chance to correct it, its called DESIGN DEVELOPMENT and EVEN the CONSTRUCTION DOCUMENTATION phase. That is when you should have that nailed down. Not when you getting bids.
There should be close to zero percent chance any reputable contractor would come in over the budget if you scoped the project and cost control through the design at 25% below the amount allocated. If the criteria for the project could not even remotely be within these constraint parameters of safety margins from the budget, and would exceed the $450K that the client has for the project, you should have been alerting the client. This should have been clear during schematic design phase. How hard us that to figure out. Those times to correct those kinds of errors was before you start making the technical submissions for permits. If you follow procedures of design process and making estimations in these stages.
The point of DD phase that you are suppose to iterate as many times in refinement and corrections before making the final set. CD is basically the final version after all drafts have been made until everything is locked down and you included all notes about code, specifications, etc. Even in DD, you should be already making a materials/quantity list and figure that out when you prepare the final DD phase set. In other words, the design gets iteratively more detailed and more closer to the final construction documents. At that point, you should be already then with refinements and make corrections to design to be within the parameter margin. The construction cost with contractor overhead and profit should be within +/- 10 to 15% of $281,250 or fairly close to that. With your fees and the engineering consultants, you should be within 10-15% of $337,500 (plus or minus). This means, you should be within your client budget. Being over $475,000 should be practically impossible. The project being between $450,000 to $475,000 should be almost impossible as it is. Being $100,000 over on a project aimed around a $450,000 project total budget should not happen ever. 5% over budget for this kind of project is within reason. It is your procedures that you use and price point where you start your design around. If you start design around a construction material & labor cost estimate to be capped at $200,000, you should already be at a point that bids should never exceed $450,000 from competent and reputable contractors. This also means that you don't go down a process of designing and onto construction documentation phase and sometimes even earlier stages of the processes of delivering services.
Being forthright and candid with the client at all times from initial consultation throughout, this should never had happen at all. In fact, if the project was never going to be be feasible in the budget, you should have said outright we are not going to continue further down this design process unless either the client secures more money or the client changes the project scope parameter until it is feasible. If neither is acceptable to client, terminate contract of performing services and collect what you are owed up to that phase. Otherwise you lead the client on a primrose path to failure. Even an architect who had been a licensed architect since 1967 had told me that nearly 20 years ago. If you don't carry on responsibility and accountability for taking every diligent effort to design within and establish a realistic scope of work and criteria that is feasible.
You are suppose to be the professional... LEAD! Take charge and keep the client's wish lists from derailing the project. You might think being $100,000 over budget is just fine when your customary project's budget is $2M+. That may be fine but that $100,000 over budget on a project that is under $500K is not acceptable. If the client is just a person versus a corporation or a government, you can't just be so cavalier about the notion of going over budget.
Wilma, do you understand what I am talking about?
While there isn't necessarily a formal fiduciary responsibility, there is actually an informal quasi-fiduciary responsibility. This is established in court cases and past judicial rulings which has placed architects, building designers or any design professional (regardless of licensure requirements or not) to possess some limited form of fiduciary duty. Not quite like that of say... an accountant. In that you don't engage in a wanton disregard to financial parameters. As a professional, you know or reasonably would know that there is more expenses to a project than just the construction material and labor cost. You must plan for room sufficient to account for variability as well as contingency. You know there is inflation so you should account for it to some degree based on past trend, an average of the last 5 years in the project area would be a fair basis. You should consider that factor as an average inflation trend over project timeline including reasonable estimation of project construction including permit waiting period and all that stuff. You need to plan for this. This doesn't mean you owe a more detailed and involved fiduciary duty unless you create it in the contract which establishes it on a formal level.
You do, however, have inherent responsibility to propose solutions and lead clients to a successful outcome to the best of your ability by applying professional judgment and factoring in for these things you know exists with virtually every project. Hence, standard of care. Within the extent of standard of care, you should be endeavoring to design the project within the budget parameter. This is why there *MAY* be a potential issue where the client is not obligated to pay the OP if there is some pattern of errors throughout the design process that systematically put the project outside realistic and would have a duty to inform the client.
This should have been caught well before construction documentation / permit phase. Take note of the case precedence where some limited form of fiduciary duty exists due to the nature of the professional service that by nature arise from a relationship of trust, confidence, and reliance. They contract us on this very basis of trust, confidence, and reliance on our professional judgment and guidance due to our professional knowledge and skill in the subject matter that the client does not possess.
While you do not have a duty to provide the client with the most profitable option or least expensive option unless you establish that in contract, you do have, however a duty to take reasonable efforts to design within the budget, and know clearly where the outer boundaries of the budget is and design a solution to the best of your ability within that if possible under the given project criteria. If not, you make known to client and suggest the client to either increase their available secured funding for the project and thus increase the budget or make changes to the project criteria to a feasible option. The client ultimately makes the decisions on this but you need to professionally lead and advise them.
You are not absolutely free to disregard the budget. If you don't take some duty of care to the client's budget and be considerate of it in the design then you would be disserving the client. This is what I been talking about, here.
If the client has contracted a professional construction cost estimator, the architect or designer may forgo cost estimation but even then, should do some sanity check estimations as the design develops. Yes, if you use B101, you could, for example, have a clause where you redesign to being under budget without additional charge. However, you should have done every reasonable effort from the start to work the design of the project to be well likely to be under the budget and that the bids would most likely be under that level with very little likelihood of exceeding it at all at the bid level.
You don't know what happened and it's irresponsible for you to assume you did. And professional is not a word for anyone engaged in an occupation, it is reserved for those who undergo lengthy education and specialized training in a field where you're engaging in making decisions requiring discernment and judgment, NOT just doing a routine over and over again. Discernment and judgment are things you have never been able to demonstrate, in these forums at least. The accrediting body for professionals is the government, not a club with a test. I'm putting you back on ignore.
As a ballpark figure, on average for new construction like building a new house or the construction of an addition (the section that is the addition is usually around 55%-65% material and remainder is the labor. A gut and redo will likely be 50%-70% material and rest the labor (including the indirect costs and benefits and such). Historic preservation and remodels that preserves existing construction will likely be the inverse of that for new construction. Then you tack on the O&P which would be typically equal to a sum equal to around 10%-30% of the construction material and labor cost. design fees would be about 5% to 15% of the construction material & labor rate. A lot of times that may include the engineering consultants to the primary design professional. Then you have misc. costs (which can be from 5% to 20% added on top of the construction material and labor if you don't count buying property and that the property acquisition isn't part of the project) so when you think about how much percentage do you add to account for contractor O&P, the misc. expenses associated with the project and the design services fee, you can see it range from 20% (10%, 5%, 5%) to 65% (30%, 20%, 15%). In which case, you want the construction material & labor to probably be 30% to 40% of the project budget with contingency built in and incorporating inflation adjustments to the project over project design & construction timeline that is being considered. In some cases, you can dial that construction material & labor to around 45%-50% of the project budget.
If the client have to buy land, all the above should amount to 40%-70% of the project budget but often it between 55%-70% zone where the property acquisition total (including realtor/broker fees and all) would be around 1/3 the project cost give or take 5-10% (plus/minus). Sometimes buying property is very expensive so that can be an exceptional situation. This is just what normal statistical data would approximately support.
Gone fishing…brb
" I am not saying the OP shouldn't be paid but however should be paid depends on if the OP performed in accordance with professional standard of care what was performed"
@Rick , this statement is wrong / i wont bother reading the rest of what you wrote.
However , if the client is able to prove that this is a " professional negligence" which caused their loss or damage... they can choose to take a legal option.
Examples of architect negligence may include failing to:
Identify that a construction site was unfit for the intended design;
Provide a reasonable estimate of development costs;
Gain the required approvals for development;
Produce legally compliant plans or designs
I dont know why I bother , ... anyway
True, but don't forget you have a project budget. You are a professional and what we do is construction design. We aren't making paintings to be hung on a wall in an art gallery. We are making design solutions for a project. We do in fact have a duty to intentionally design within the client's budget if they provide us the information. We have a duty to know and obtain information about the client's budget. We do have a duty to approach the project along a feasible path. If clients wants bullshit drawings not based in reality and feasibility, they'd just ask a 6 year old to make sketches.
As professionals, we need to be ACCOUNTABLE. If you are not accountable to your actions then you are not a professional. That is a key fundamental criteria of a profession being a profession is accountability. Clients rely on your EXPERT knowledge because you design buildings to be constructed day in and day out, 5+ days a week for upwards of 50 or so weeks a year (give or take for vacation and sick leave days). That's your job. They rely on YOU to make designs that meets their criteria and meet their budget. If criteria can not meet budget then either one of two things MUST happen... either the criteria for the design must change or the budget. As professionals, we need to know if the client has secured the funding to do so at least substantively.
If a client only has $20,000 and they want $20,000,000 project, how is that even a remote chance of them even doing. No point in going through the design process with them. That's mostly a business decision whether to even have the person as a client. If they have only $200,000 and can't get to say the $450,000 budget, you need to know and need to inquire where they really at because they might not even be there. Now this is less the issue in the OP's case.
In general, you can't assume the client is going to be able to just bump up the project budget to say, $650,000. For every dollar of overage, the budget would need to be increased by at least $2.
Now, throughout design process, we would be doing a multitude of cost estimation opinions based at first on concept estimation or something like that. Then as the design revises, we use either unit cost or quantity-takeoff estimation and recomputing those and reconciling for missing information with contingency with a larger contingency at the beginning and dialing that in as the design refines with more detail.
Along the process, you may need to make changes to adjust the cost down. All of that should be done BEFORE the contractors' bid estimates. There is also why the requisite safety margin what the design estimate costs would be and the total budget.
If you are not informing the client throughout the rendering of services whenever the project cost is likely to fall into the "danger zone" of going over budget, you are being a disservice to the client and that could be negligence. You said the client needs to prove that. Actually, it would be their lawyer!
Clients usually will involve a lawyer because if they are going to sue you, they are likely going to be withholding payment to you and using that to get the lawyer started.
I'm going to regret this but - Richard, you are incorrect.
Unless specified by the client in the contract the architect is not responsible for creating an accurate cost estimate for the work. The owner is responsible for that.
When the cost estimate occurs depends on the project delivery method the client has chosen.
Wilma, I didn't read anything Rick wrote but I did see you claim "professional" as being essentially for licensed pros only. That is incorrect.
Architects have successfully barred people like me, a residential designer with a ton of experience, the same insurance as my licensed peers and deeper/broader knowledge than many of them, from being able to use the term "architecture" or any derivative in any form, ever.
But I am indeed a "design professional." It's what my insurance says, it's what code offices ask for and have told me explicitly that I'm included, and there are even groups comparable to the AIA that provide testing and certificates if you want to prove that you know what you're doing. Until the AIA or some other organization limits the word "professional" further than it already is, both Rick and I are indeed design professionals.
Wilma Buttfit wrote:
"You don't know what happened and it's irresponsible for you to assume you did. And professional is not a word for anyone engaged in an occupation, it is reserved for those who undergo lengthy education and specialized training in a field where you're engaging in making decisions requiring discernment and judgment, NOT just doing a routine over and over again. Discernment and judgment are things you have never been able to demonstrate, in these forums at least. The accrediting body for professionals is the government, not a club with a test. I'm putting you back on ignore."
I apologize for my language but the bolded part of your statement is bullshit.
OddArchitect,
I didn't mean the estimates have to be contractor level of accurate but that it should be reasonably within budget as you said but that can be done by prudent level of detail in estimation as closely as possible with methods similar to that contractor's use as you go through refinement.
The more accurate or less BS it is. You can do enough that you aren't planning the entire client's budget just on construction material cost alone. That would certainly result in a project exceeding the client's budget 100% of the time.
Bottom Line: My point is that accuracy relative that the professional opinion is sufficiently accurate enough that you can make corrective measures in design decisions early on and throughout and that the estimates aren't total b.s. where it is somewhat grounded in the real world. I know we went on a bit on this but my point at the beginning was that there *MAY* be a potential issue where there could be sufficient errors or omission in the design process and in estimating or lack of estimating or not having the correct basis understood of what the project budget is. This COULD be a basis where the client doesn't pay. The OP appear to indicate somewhat what the project delivery method is or the ones it could be but it is still not perfectly clear.
"You don't know what happened and it's irresponsible for you to assume you did. And professional is not a word for anyone engaged in an occupation, it is reserved for those who undergo lengthy education and specialized training in a field where you're engaging in making decisions requiring discernment and judgment, NOT just doing a routine over and over again. Discernment and judgment are things you have never been able to demonstrate, in these forums at least. The accrediting body for professionals is the government, not a club with a test. I'm putting you back on ignore."
Wilma...wilma...wilma...
It is illegal and unconstitutional for states to regulate and control common words like professional or even design professional in that fashion. States may adopt laws that defines the word professional or design professional to specify the intended scope of those words when used in a body of law like a chapter of a state's statutory law or a regulation like building codes. Aside from that, it is illegal to regulate the word professional. Referring to the part in bold.
The part in italics, you realize the reason the AIA isn't administering the licensure exam is a concern that state government offloading licensing process to one singular private organization would violate the antitrust laws. Additionally, they were concern that the 10th Amendment provision for "police powers" of the state can not go to private organization especially when you factor in "practice act" into it. Professional certifications of professionals exists for a long time.
Okay, its a little more involved in the decision regarding why it went to being a state licensing board versus private entities such as AIA being the "licensing" regulator.
As for the word "professional", that's a common word that can't be regulated. "Design" in the combination of two words "design professional" is simply grammatical way of defining what kind of professional like the word "building" in "building designer" is to indicate what kind of designer the designer is. Same idea.
I deeply regret my involvement in this discussion and don't care to argue. IBC defines design professional as one who is registered or licensed by the jurisdiction. Which is exactly what I said. Furthermore, my state and many others have practice acts that define building design and who is qualified to do it. Don't hate on me, it's not my opinion.
It is your opinion that a person cannot be a professional without 'lengthy education and specialized training'. Furthermore - the IBC has no influence on what is a professional. A professional is a person engaged or qualified in a profession and abides by a standard of care / ethics. That doesn't require a license.
Finally - requirements that define who can design what types of buildings has nothing do with a definition of a professional. There are plenty of architects who are professionals and not allowed to design certain types of buildings in certain areas. Just like there are plenty of architects who are not professionals. I know plenty of professionals who are not architects.
Not sure what we are arguing here. Professional as in doing something for a living is not the same as a member of a regulated profession. Professions are those such as law, engineering and architecture that over years gained this designation in the public eyes. As for the building department and IBC, it is relevant, why is it not? IBC is adopted as law unless they strike out that definition. Building officials should not be using other definitions. We are here because I originally said I don't like that Richard presents himself as an architect and he isn't one. And he is not contributing to this discussion but is distracting from it.
Wilma Buttfit
You can be a professional without a license. You can have a license and not be a professional. How is this hard for you to understand?
What you're describing / arguing is a 'licensed professional'.
Wilma, FYI: The current edition of IBC (2024) definition is for REGISTERED DESIGN PROFESSIONAL and maybe listed as DESIGN PROFESSIONAL, REGISTERED and DESIGN PROFESSIONAL OF RESPONSIBLE CHARGE, REGISTERED. This change had been implemented in IBC 2021 and maybe IBC 2018. Lets say it has been implemented for awhile. This is because in the code sections, they are referring to instances where a REGISTERED DESIGN PROFESSIONAL is required. ICC change on this front is a passive way ICC is recognizing there are other design professionals that are simply not regulated by licensing laws but do not yet need to explicitly define it in the code because the code is simply indicating instances where a registered design professional is required. When a registered design professional is not required, a non-registered / non-licensed design professional or otherwise any person under the exemption may do. So read that chapter 2, again.
Wilma,
How am I presenting myself or claiming myself to be an Architect with regards to this discussion or others?
FYI: Statutory definition is a state law is for defining the meaning of the word as USED in the statutory text to define the intended meaning of the word as used. In other words, codify the legislative intent and scope of the meaning of a word that otherwise may have broader meaning.
I'm sorry, the English or American English is not regulated by some government entity. The word is define in dictionaries and spans centuries. Learn the etymology and history of the word professional and you'll realize your definition is wrong but is accurate to what OddArchitect said --- "LICENSED PROFESSIONAL". Full cap & bold emphasis by me.
Aside from being a building design professional (building designer), I am also a professional ASSHOLE. Thank you very much and now go fuck off Wilma.... can't make myself a liar about being a professional asshole, right?
The IBC indeed uses the term "design professional," but always preceded by "registered." Neither Rick or I are claiming to be registered. I don't do work that falls under the IBC, only the IRC, except in specific situations where the IRC refers to the IBC. https://codes.iccsafe.org/content/IBC2021P1/chapter-1-scope-and-administration#IBC2021P1_Ch01_Sec107
In the states where I do projects, there are projects that I do that falls under both codes. This is due to the exemption in my state isn't exclusive to residential that would fall under IRC. In Washington, I may design multi-family residential projects with up to 4 units. That may fall under IBC instead of IRC. The laws where I do projects govern what I may perform services with regards. Any "non-exempt project" may be essentially an interior design services type contract which is a service that is provided out of the array of services offered and performed.
Licensed Professionals
Design Professionals (honestly, Wood Guy with what you do, I don't care if you're not licensed you're an architect to me)
Professionals
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Balkins