Different types of architectural fees

Fees – what do you get for your money 

Following on from our previous post about architectural fees is the next instalment about the pros and cons of the 3 different ways to formulate a quote. 

These are: 

1 – Hourly Rate
2 – Percent Rate – based on final build cost
3 – Fixed Fee 

Hourly Rate 

Good for work where there is no defined solution, for small sections of work, to explore different design solutions etc. 

Pros 

• Clients only pay for what work is completed
  
• High quality of work

Cons 

• Needs full trust from client
• Total fee cost uncertainty for client

Percent Rate – based on final build cost 

Probably the fairest fee agreement as relatively equal spread of risk and changes to both architectural firm and client. Price caps can sometimes be used to manage material cost fluctations for certain parts of the work. 

Pros 

• Design work cost is generally proportionate to build work cost
• Scope creep doesn’t need to be constantly renegotiated
• Fee may decrease if build cost lower than expected

Cons

• Material cost changes may increase price
• Client doesn’t need to know exactly what they want
• Fee may increase if build cost higher than expected

Fixed Fee 

Good for simple and straightforward projects where there is likely to be reduced architectural design input from the architectural firm. If a higher level of creative problem solving or attention to detail or better customer service is provided then a higher fee usually reflects the extra time to provide these. Architecture firms probably need to add on a contingency to their quotes to allow for uncertainty and the extra risks they are taking on. 

Pros

• Cost certainty for client, unless they change their minds and the scope of work
• More risk for architectural firm, less risk for clients
• Not much scope for changes unless these are priced as an extra work item / variation

Cons 

• Clients must know exactly what they want, not much room for change or delay
• Less risk for clients
• Architectural firm needs to make it very clear when pricing about what is included and excluded 

Summary

We hope this helps give you a balanced over-view of the different ways of creating a quote and what needs to be considered.