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fee calculation

edited July 2006 in Q and A
In the enforced absence of fee scales, what other methods are people using to determine fees? I must admit I still sneak a quiet look at what the fee would have been under the old system (just as a comparison!), then, I try to calculate the fee based on a drawing list breakdown and then come up with another fee based on similar past jobs and how much I lost on them... then I average it out.

Any other bright ideas?
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Comments

  • edited January 1970
    We tend to use the drawing list breakdown as well - with a comparison to a percentage fee. The trouble with using a drawing schedule approach is that it is difficult to factor in intangibles like co-ordination, product selection and general job admin.
  • edited January 1970
    The drawing list method is one that our office uses to much amusement. I work out the number of drawings after the fee has been agreed. Yer get what yer willing to pay.
  • DanDan
    edited January 1970
    I think this is an issue that makes the practice of architecture very difficult.

    We've been discussing this in our office recently... just giving it a bump if anyone else has anything to say...?
  • edited December 2007
    delete, delete !
  • edited January 1970
    Excuse my ignorance Peter, but what was the old system and what was the rate then and what is this enforced absence of fee scales you refer to?
    And Mark Melb, what are the details of the drawing list method?

    I have just set up an office structure that revolves around time sheets and task codes (refered to above) and an hourly rate that varies slightly according to client contact, client amendments, sketch, working and presentation drawing rates in ascending order, and work done on behalf of the client that could have been done by them but they couldn't be bothered and fair enough. Also client counselling attracts an exhorbitant rate on the basis that I am not a nanny. Client/ house design development stage includes surveys and research and any amendments.

    To manage the endless possibilities of chatter eating well into a clients budget and my time, I will be sending them away after the first free hours consultation with a comprehensive questionairre that I have designed as a mind mending exercise basically about spatial resolutions and a detailed materials and methods research exercise that the client does with their interested other half etc before they come back and workshop what it is they want with 'the professionals'.

    The idea is that late amendments are kept to a minimum and the client is also made aware first hand what is involved in designing their dreams into a functional reality. They therefore both 'own' a lot more of the project and consequently value it enough to pay what is frankly a fair value for my expertise in bringing it together for them.

    I don't know what architects are familiar with, but the time sheet works by filling it in quickly (and easily with task codes and rounded up and down five minute time keeping) every time I shift from one job to another either from brief to brief or within the same brief. At the end of the day that information is loaded into the files of each client and when done or needed, a spread sheet is spat out and a notice or invoice is sent out.
    That way the time sheet can also cover normal office expenses and diary notation and I only have to ensure that I give half an hour at the end of a day to book keeping which is essentially reduced to data processing.

    That's the theory anyway, but I have heard of a several similar methods used to good effect. The big advantage is that I don't have to average out anything except the rounding up and down by five minutes which make calculation faster, and when the client gets their invoice they know down to the minute how bloody hard I have been at it for them and exactly what I was doing all day. And I do too. Also for my office I can seperate an expenses list out of the data that'll keep me ahead on paper, ink jets, entertainment etc.

    To make it a little easier I'll be laminating the task code sheet and turning it into a clipboard for the time sheets.
  • edited January 1970
    Hi
    I got a note from my insurer around the beginning of last year reminding me (though I'd not been told) that I should not use the RAIA fee scales to calculate fees in the future. I assumed the reasons for this stemmed from the productivity commission's inquiry into architects' services in 2000.
    PC INQUIRY (PDF)

    A quick look round the net turns up an ACCC determination in October basically telling the RAIA to ditch its fee scales pronto as they were anti-competitive. And the RAIA did.

    There was a rumour that the RAIA would replace the scales with some other guidance on the rather complex matter of trying to set fees for architectural services. But this ACCC report states:

    "The ACCC is of the view, however, that the RAIA’s proposal that it be granted
    authorisation to produce future fee guides which are not specified in its application is too
    broad and not specific enough to allow the ACCC to properly assess their potential
    benefits and detriments and therefore the ACCC does not propose granting authorisation to this aspect of the RAIA’s application."

    ACCC DETERMINATION OCT 2005

    The RAIA had argued that it should be able to advise on some methods for clients and architects to negotiate a fee:
    (3) Authorisation for RAIA to produce methodologies, filed with and approved by ACCC, to assist architects to develop fee proposals and users of architects' services to negotiate appropriate fee arrangements for architectural services; being methodologies which:
    (iii) provide for architects to input their respective costs and proposed overhead and profit margins rather than containing preset cost and profit figures
    (iv) include a prominent statement that architects and clients are free to agree conditions of engagement and fees on any basis whatsoever.

    but alas this was knocked on the head because it wasn't in the public interest to develop a system to calculate a professional fee. Instead each architect is to use his or her own methods to work out what to charge. As the now illegal fee scales were developed over decades up until the 1990s, they contained much wisdom that is now off limits. To use those fee scales now is risky, not just because it isn't legal to, but because they haven't been updated for 10 or 12 years and too much has changed.

    Yes the Drawing List method is a bit of a stab in the dark, but useful for calculating documentation fees on a project when you've done a similar one not too long ago. I try to find the discipline and time to analyse what I've charged for previous similar jobs, whether they made a profit, whether my guesses about hours were accurate, and where any time blowouts were.

    Some of my jobs are in NZ, where percentage scales are still legal. It's even on the web!
    http://www.architecturenz.net/working_story2.aspx
  • edited January 1970
    TIP
    If its a large enough job to have a quanitity surveyor -
    then have the QS set the fees or suggest them to consultants.
    They see everyone's over a long period of time and know the levels for various jobs.
  • edited January 1970
    So what does the 'drawing list method' involve?
  • edited January 1970
    Just working our how many drawings you're going to do, what size and scale they are, and estimating how long each will take. Same for schedules and specifications. Based on previous similar jobs I also try to estimate how many hours are going to be spent coordinating consultants, researching suppliers, dealing with the client, etc. Pretty rough but it seems to work.
  • edited January 1970
    do ideas = drawings?
  • edited January 1970
    I am going to answer this one miles, with, OF course ideas equals drawings. It all equals drawings, as the first task of a drawing is an idea and not even your idea, but you should still charge for it because an idea is a task just as a first foot out the door is a circumnavigation
    The time sheet works by filling it in quickly (and easily with task codes and rounded up and down five minute time keeping) every time I shift from one job to another either from brief to brief or within the same brief.

    The thing with a time sheet is that it goes with you where ever you are and you only need to think of it each time you change your task. That involves simply noting down the time rounded up or down by five minutes (which evens out throught the day) next to a three letter task code and if you've got a lot on, a job code no. as well. That's it. The tasks are reduced to about 15 codes to simplify it and the data processing gives you a read out daily or weekly of exactly how long in total all the seperate tasks took and how long a job is taking

    I have another version i am considering that includes noting phone calls recieved and made next to the tasks columns within the time column which means that the time sheet doubles as a diary. Knowing exactly how long it took to achieve a task (removing the guess work) means you know what they cost in real time and whether or not you can make any efficiancies and whether or not you can offord to 'discount' if that's not what you're already doing, but don't know it.

    When I was a chef I used a very similar method to find out which aprentices were in need of help without having to be on their back all day, also the fellows would end up trying to beat their own times and I had a record of their efficiancies that also included a stock take list that compiled itself. In the kitchen it was unrelated to clocking on and off but the idea was used to keep a track of methodology by noting on individual mis en plus lists at what time each task was begun. Alongside the house dockets and suppliers invoices which told us what actually got to the tables from what was actually in the fridge, this drastically minimsed theft and improved the time to task ratios simply by making the cooks aware of how much they were bludging and or 'wasting'

    The Wangarratta design office that I know uses the system, has to juggle about seven or eight part timers who may or may not see the boss at all during a week but he knows from their individual time sheets exactly where they are up to, where each job sheet is up to and how much to both charge the client and pay the worker. They sign it as a legal document at the end of each day and the secretary does all the tallying.
  • mermer
    edited 8:54AM
    RAIA Management Note AN02.03.300 gives a pretty good breakdown for calculating time cost rates and charge out rates while factoring salaries, fixed and controllable overheads and profit. Breaking down each stage of the project allows you to keep track of hours spent and the resulting cost when determining future fees for similar projects. Keeping accurate timesheets daily allows the information gathered to be used effectively. Eventually you can see how you are tracking over several projects and correct accordingly. I found this RAIA note to be an interesting read and helpful.
  • edited 8:54AM
    all. as a sideline re tracking time. weve just started using an online timesheet thing clicktime.com another small office in melb put us onto it. apparently lab use it too (so it must be good_not). we have found it really good and cheap with good reporting functions so you can just send the report with your invoice!
  • edited 8:54AM
    Here's a little snippet from Europe on calculating, may be of interest to some.

    http://www.an-architecture.com/2007/04/hoai-hoa-simplified-guide-to-architects.html
  • edited 8:54AM
    In the comments to that article is an interesting one.... "What if ad writers get paid according to the printing-costs??" The gist being that basing fees solely on the value and complexity of the job might be missing an angle. Some architects spend a lot more time, effort, and money on the design and documentation process than others would given the same project. This element (the quality of the design) doesn't get taken into account by the sort of fee scale illustrated in the article.
    I am reminded of an ancient article I wrote on this site, maybe google can find it for me... yes, wow it was 2001:

    http://www.butterpaper.com/editorials/editorial090801.htm
    This set of a minor storm on this forum which I have also found, though all theposters names seem to have changed to "anonymous' in the conversion to the new forum software:
    http://www.butterpaper.com/vanilla/comments.php?DiscussionID=53&page=1#Item_0
  • edited April 2008
    Ah yes, the Quality of the Design.

    My infuriation with getting blank looks about design quality from potential clients and lots of others from high school and up, and my indignation at blatant belittlement of the whole consept of design quality, led me to grossly reveal my inexcusable clanger in the media/ocrity post.

    But I won't let up about it, because generally I believe my arguement stands on it's own. That mediocrity is responsible for forcing 'designers' (of anything) to forgo a 'design quality' element in their fee scales.
    Obviously an 'Architect' might ask considerably more than a 'building designer' for quite a few more years of study, and someone with many more years of experiance might charge more than a novice. But the facts as I have heard them myself and read them in this forum and others is that quite often a level playing field (God, i hate that cliche and it's undiscriminating application) of fees is forced upon designers of any ilk until they reach a status of desire-ability that lifts them out of the swamp. That this level playing field seems to be self applied in a lot of cases reveals that society in general expects a form of self censorship when it comes to quality. I can see that false claims of quality will certainly muddy the water and do regularly, but why would that be so unless the inabilty to recognise quality wasn't a feature of the cultural landscape in the first place.
    Media/ocrity is educating the public about design when designers should be assuming that role. The RIAI and the BDAV and all the other professional building associations do a grand job of trying to educate the public but of nessecity their main focus in education is their own members.
    In my opinion, that leaves us as individuals to educate the clients by including a 'design quality' element in our fees.
    It's a hard one if we believe that design quality is for others to decide but we know if we have put in the effort or not, and if it's effortless, we know if that's the truth or not.
    But if we believe we have taken the time in research and design (blush blush re media/ocrity post), then we know what design quality is and what it cost to produce, then it shouldn't be hard to quantify a reasonable reward for what obviously benefits the client.

    But mediocrity cannot be allowed to prevail simply because as designers we are up against people who haven't got a clue. Would journalists accept a pay structure based on the fact that some people can't read?
    I have a rich woman niehbour who said to me during a converstion based around asking me what I intended to do for a living, that design quality was only applicable to jewellery and how could I be so arrogant as to propose a fee based on design quality. I only want to design houses and you can go and get one of those anywhere.
    People honestly believe that rarity and expense defines quality.
    It's hard to be up against such ignorance but I am not going to stop reminding a client that they are paying for more than a nice picture. The more of us who include quality in fees the more quality will become the norm in the designs. And the more the public will see quality as a norm, the more mediocrity will diminish.
  • edited 8:54AM
    c'mon mr seasons 'rich woman neighbour' methinks you have a problem with the chattering classes whom we dutifully serve.... i think all have failed to discuss the idea of TALENT. good architects should get paid more than average architects. our wonderful AIA mens club (RAIA for those of you who missed our presidents dumb email) would like to think that all architects are created equal and as such should charge the same, bollocks! you should charge what you can get away with based on your ability to produce a bloody good building or at least your ablity to market yourself to as many people as possible and convince all that you are in fact the best architect in town (for their particular project of course).
  • edited April 2008
    Ah but, Miles, my "rich woman nieghbour" is indeed rich and she is indeed a woman but that doesn't mean she hasn't comissioned an architect. In fact she has commissioned a few as she has lots of properties to build on, but her taste is appalling and I pity the poor architects who have had to persuade her of thier intentions. I don't have a problem with such clients as I intend to rigourously avoid them if i can, but i know that her type of mediocrity is impacting what fees those architects were able to charge. Yes you may have plenty of clients to choose from, but out here in the bush where i live and all over Austarlia for that matter it is the reverse client professional situation that usually prevails. The client has plenty of architects and designers and jacks of all trade builders to choose from.
    As for talent. Yes that is exactly what I refer to when i say "The more the public will see quality as a norm, the more mediocrity will diminish". You feel good about your skill level enough to believe you are talented but does your rescode demand that you use it vigourously beyond a bare minimum and did the institution you passed through demand that you learn the highest levels of sustainable design completely aside from the 'talent' that may be brought to bear upon such things, and do your collegues expect you to keep well up to date with new technologies or do they as a lot do just keep on specifying the same old same old what ever their 'talent' is for doing so. Yes good architects should get paid more than average architects, but by whose defenition do we decide what 'good' is? Proper specification of cutting edge sustainability both in technology and design or gee whiz rendering. c'mon mr miles, where do you stand?
  • edited 8:54AM
    think like the child of the artist and the labourer when the child is providing for a wife who's parents are an accountant and a mechanic; when your client is a prince of mediocrity.

    when your client is switched on charge in accord with inspiration that suits the construction cost of the inspiration arising from the project plus a factor for what the inspiration is worth in the clients life minus what the project is worth in your life.

    just tinkering with this .....
    some very practical comments above.
  • edited 8:54AM
    Just browsing and realised my clarity is in need of clarification.

    When I said two posts above "The client has plenty of architects and designers and jacks of all trade builders to choose from" I mean that that is the range of choice that clients think they have, when it comes to commissioning a house. When commissioning any other building, people out here don't even bother to think of the existance of a designer or architect. Therefore the architect out here not only has professional competition but a factor of three or four non professional competition as well. Hence fee structure out here from a clients point of view, looks more like construction cost plus legals. In that enviroment, 'design quality' is something that the 'chattering classes' can't divorce from luxery goods.

    In this attitude is a distilled parameter that reflects the state of affairs in all economic enviroments as experianced in Australia, that i suggest broadly reflects that faced by designers in the city, with the proviso that my city cousins may have a lot more mildly educated clients in ratio to appreciative architects.

    Do we price our selves out of a job and forgo design quality because 'no one' cares or do we charge for design quality and just hope that eventually it will become pervasive enough as to reflect hope and decency and forthought. I believe the latter even if it means taking on a second job because there are plenty of other places in the world where design quality really is appreciated and catered for in budgets, so it does exist as a norm and that must happen here eventually.

    Just today I read (bdavnews vol 14 ed 4 may 08) that the Stockland project in Cranbourne East will be "the first of its kind involving government. planners and commercial developers". The first of its kind in Australia maybe but no mention in the blurb of individual sustainable designs for houses, just whole suburb sustainable design in layouts etc. At least its a start down the road to the consept of quality in design practises asscoiated with housing. The Planning Institute of Australia must be wrapped, and good luck to them. Now if it was coupled with a consept of design quality, house by house, then the sustainable accolades would really have something to crow about.

    And designers could comfortably charge for design quality without having to have this thread of conversation.
  • edited 8:54AM
    sorry mr seasons ive been away from the early morning keyboard for a while..distracted by that work stuff. yr starting to sound like a few pages out of 'the fountainhead'! staying faithful to your art etc etc. i think the profession is confused about its position in many areas. our deluded president for a start barking on about sustainability whilst designed a bloated ugly $42M house for that jolly aussie home loan bloke. but enough of my pet project 'the intelligence of (r)aia presidents'.
    the profession thinks its useful, others dont
    the profession thinks its members think what they think, they dont
    the profession awards itself accolades that confirm it has no idea what others think
    the architectural profession needs a major overhaul but there is no-one who will lead that overhaul and make the hard decisions (anyone mention deregulation...?)
    let us work hard to communicate exactly what we do, let us work towards demonstrating that good ideas can contribute to saving the planet, let us speak a language all can understand get off our ivory tower stop being sooo defensive and be bloody useful
    (no i dont do parties)
  • edited 8:54AM
    No worries miles. You don't need to apologise son. I don't do parties either.
    If you've got some more time i'd appreciate you elaborating your 'good ideas that contribute to saving the planet'. I suppose if you genuinely wish to do as invited we had better start up another thread as this ones heading off track in which case.

    It's not at all that I want to debate you into a corner, it's just that I believe in a vigorous dissertation of ideas instead of sound bites which end in echo chambers.
    Your statement above contains some fairly heated conjecture covering too broad a range of topics really to cover in a reasonable reply here but the sense of it to me seems that you disagree with the credentials of the RAIA and basically are calling for its disbandment. Not much of a tall order really, but can I ask just what credentials you think they should display?

    I have always found it useful to formulate my ideas beyond a bark, even if proved wrong, because I never fail to benefit from a good windge and my friends often enjoy it with me for the same reasons.
  • edited 8:54AM
    yes architects can do some good BUT lets not confuse the production of good architecture with the idea of getting paid (returning to the point). the business of architecture is quite different from the practice of architecture. the most useful thing i heard recently was an architecture school (uts i think) offering a 'running a small business tafe diploma' as a contributing elective to its architecture degree. it is only through education of young architects to market forces that the profession may be able to communicate its worth and therefore become effectively renumerated. the absence of our wonderfully effective professional body pay scale is both frustrating and useful in that the random archaic method of a percentage fee has hopefully evaporated allowing architects to articulate independantly how they choose to be paid and for what. i worked it the states recently and the small practice i was with there used a very clear process of telling the client how much time(fee) they had for each bit of the design process and logging time of all individuals online so the client could see at any moment how much gas they had used and how much it cost. didactic? yes. effective? absolutely. was the client happy? completely. ahh you may say what about the time spent out of the office thinking...bollocks. what about paying for good ideas...good architects cost the same as bad ones under the (r)aia scale. good ideas are the same price as bad ones? surely not. if you are good/ more experienced you are more expensive (just like lawyers, chef's, admen, winemakers etc). i had a lawyer say to me once ' i'm expensive but i read quickly' ...something in that for everyone i think.
  • edited 8:54AM
    Yes, If you are good and OR more experienced you should be more expensive, and hopefully more experienced does mean good as well.
    "ahh you may say what about the time spent out of the office thinking...bollocks."
    No I don't say actually, I think when the day is done the office should be left behind or my family misses out somewhat on my cooking and conversation. Kind of like not doing parties. the client is paying for my time, not my free time.
    UTS has always been rather practical.
    I will start a post else where in which i will rabbit on about 'good architecture'
  • edited 8:54AM
    I have recently heard from three architects with middling-to-big names that they refuse to touch council tenders where the fee is a big chunk of the evaluation criteria, and where design merit is a much smaller chunk - or not a chunk at all. No doubt they are in a position to ignore fee bids.
    But what if we all did? I think the (R)AIA or ACA has been looking at the dodginess of many local council tenders and contracts, but I haven't heard of any results. It was also something I was expecting that government architects might address, but again no noise on that front.
    Typical evaluation criteria: Fee 40%, QA/OH&S 20%, Track record / Relevant Experience 20%, Financial Capability / Resources 20%
    Better evaluation criteria?: Fee 20%, QA/OH&S 10%, Track record / Relevant Experience 20%, Financial Capability / Resources 20%, Design Ability 30%.
    But design ability isn't something that can be easily agreed upon, or swiftly converted into a score by an evaluation committee with no or little design awareness, and for whom design ability = design cleverness = trouble.
    What if all public fee tenders became public expressions of interest (ie no fee) , leading to a shortlist of architects who would be paid to include a concept design as part of their tender.
    Moving the fee into part 2 would also give architects and their subconsultants a better idea of the scope of work, rather than base their fixed fees on the council's initial optimistic budget.
     
  • edited 8:54AM
    P - govt has been around long enough to know how much $$$ fee and time is properly required to do any project. NSW and Qld govt arch have the data from the past century. Fee should be taken out of the criteria all together by govt setting a fee rate based on transparant data.

    The only firms who would balk at this would be the self interest/preservation types who like to raid the public purse and argue for the demolition of the govt arch dept.
  • edited August 2009
    ^^ err. your haircutting recipe is the bs councils already go in for.
    u don't need to rig that stuff to make it look reasonable - already is reasonable.

    sound like a party pooper. but

    Expressions of interests with designs is newspeak for comps? terrific history too.
    bi-decade belly gazing over them is like the hours spent with a repeating indian take away dinner?

    good architecture, wetf it is, happens away from the spot light as much as it does under it? - which isn't often in perfect harmony with statistical bell curve of national intelligence?

    hungry young firms buying jobs is legit if they can nick it off dead beat draughtsman with university degrees cutting a niche at the low end. good luck to them if they can turn it into a good building.

    soon as you call to institutionalise opportunity, the fresh paved level playing field will get a boom gate and a guard house at the entrance - manned by Design City Professors or self appointed guardians of good taste, or bermagui b b q guests.
  • edited 8:54AM
    Know what you mean HD. I am toing and froing on the issue. Nett result though, in architects buying jobs, is that fee % expectations lower and suddenly you find you can't afford to replace the stapler.
  • edited August 2009
    disbursements?
    charge institutional customers hard, often and ungenerously for everything once u have the job is the right thing to do. Especially councils. lets not forget these arzeholes run town planning departments and employ town planners. Time to just get rid of them and have a state govt? Gets rid of the problem in one step/or does it. Maybe then all powers of concentration from the profession can be levelled at the SGA because thats bound to be another problem.
  • edited 8:54AM
    Dunno what happened to the (R)AIA's mooted legal replacement for their 'price-fixing' fee scales.

    I know people still using them, even though they're ageing fast. They're old because they don't account for the current red tape on the private front - or the fee-slashing on the public front.

    I had a look round the web at what % fees won various council jobs and it ain't pretty. Well below the old scales and *inclusive* of sub consultants. It maybe a foot in the door for young firms eating potatoes, but it can kill those not bank-rolled or with a fat overdraft to cover cashflow whoopsy daisies.

    Other interesting tidbit found during my investigations - councils often budget 10% for design consultants but end up paying half that. They must be delighted.
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