Practice Management - 01 Fees & Resourcing

1.         Fees and Resourcing

Key issues / factors you would need to consider when putting together a fee proposal

Project Specific Issues:

Assessment of the risks and uncertainties with:

·       The nature of the client (experience, reputation, knowledge)

·       The project definition –  size and complexity, existing building works, planning issues, heritage issues, design repetition, consultants and specialist skills required, location, additional overheads.

·       Scope of services, procurement type

·       Programme / time scale

·       Resourcing requirements

Business benefits / issues:

Assessment of the benefits and opportunities:

·       Enhanced profit

·       Resources available – will we need to increase staff numbers

·       Skills available – will we need to recruit for specific skills

·       Specialist equipment / resourcing

·       Employment for existing staff

·       Business expansion ie. Opportunity to expand into a different market.

·       New market sectors

·       New client networks

·       Quality of work

Explain the professional obligations relating to the projects initial resourcing plan

·       Make sure the project is resources with the right people with right experience

·       ARB Code of Conduct – Standard 4 – Competent Management of Business. 

Section 4.2 ensure provision for adequate professional, financial and technical resources when entering a contract and throughout its duration

ARB Code of Conduct Standard 3 – Honest Promotion of your work

3.1 You are expected to promote your professional services in a truthful and responsible manner

3.4 You are expected to ensure that all architectural work is under the control and management of one or more architects

ARB Code of Conduct Standard 06 - Carry out professional work faithfully and conscientiously and with due regard to relevant technical and professional standards

6.1 You are expected to carry out your work promptly and with skill and care and in accordance with the terms of your engagement

·       RIBA Code of Conduct: - Principle 2 – Competence + guidance note 4 Appointment

Guidance note 4.4 – When accepting an appointment, members should not undertake to provide services that they know, or ought to know, are beyond their competence or resources

·       Failure to comply with these codes may result in disciplinary action by the ARB and will be taken into account if in the event of coming before the Board’s of Professional Conduct Committee

Explain the potential employment issues relating to the project resourcing

·       Working Time Regulations 1998 – regulate hours of work, rest, holiday

·       Employment Rights Act – need to have a contract in place no later than two months after commencement of work but best practice for formal contract covering all terms at the outset.

·       Health and safety at works Act – Need to protect the health, safety and welfare of employees.  Also applies to contract / consultant staff.

Practice Questions:

Project Specific Issues – Risks and Uncertainties

To ensure the greatest success for any project, the fee proposal needs to be calculated with a clear understanding of the benefits the project could bring to the practice analysed against the potential risks and uncertainties the practice may be exposing itself to by accepting the commission.

These project specific issues are listed below:

The Client

Inexperienced:

The experience of the client should be closely considered.  In this situation it is the clients first involvement in a project of this size and with this we can assume a degree of inexperience in the construction industry.  We must consider this a potential risk and plan for to allocate additional time and resources to help guide the client through the design and procurement process.  This must be reflected in the fee calculation.  An inexperience client may be more inclined to request changes to the brief / design later in the project timeline.  A mechanism for capturing the cost associated with re-documentation of potential brief / design changes should be included in the fee agreement

Experienced:

The past experience and reputation of the client should be considered when calculating the fee.  Risks associated with the uncertainty of the client are limited and this could be acknowledged in the fee to ensure a competitive proposal is put forward.  The potential for future commissions and an ongoing working relationship should not be underestimated.

The project definition

This is potentially the largest and most complex project both we and the client have undertaken.  It is clear that we must consider reaching out to specialist consultants and/or recruitment of additional skilled people to fulfil our obligations setout in Standard 4 of the ARB code of conduct.

Heritage / Conservation:

The site is within a conservation area with the potential for the victorian school building to be listed. Resources and risk must be allocated to the conservation area /listed building consent and specialist advice from a conservation consultant.

Planning Approval

Outline planning has already been granted however this planning risk is not distinguished until all reserved matters area approved.  Time must be allocated to public consultation and the skills of a planning consultant may need to be factored into the fee.

Working with Existing Buildings

Working within the scope of existing structures have an inherit risk to the profitability of the project which must be captured in the fee.  The existing building is of an age where possible site continuation and / or asbestos could be an added complexity that needs to be addressed.

Scope of Services

The scope of the service and the preferred procurement route should be discussed and agreed with the client prior to calculating a fee proposal.  An firm understanding of the clients project goals in relationship to time, cost and quality will not only help to guide the selection of a procurement route but is essential in the development of a plan to resource the project.  An accelerated project time requires additional resourcing effected in additional costs.

Overseas Project

Design Repetition

Project Resourcing

Program and timing

Business Issues – Benefits and opportunities

Will this project be the right step towards our goals for the practice?

Consult the

Project Resourcing / Appropriate skills for the job

In order to fulfil our obligations set out in standard 4 of the ARB code of conduct we must look to employ additional stall with the correct level of experience to meet the technical needs of the project.  Employing additional staff could be seen as a risk when new practices are starting out which could be mitigated by the use of a fixed term contract while future work is secured.

Business Expansion

·       Cash flow

·       Enhanced profit

Equipment Expansion

May need to expand the office to allow for increased resources.  This cost should be factored into the cash flow forecast cash flow in vs out.

New Market Section

Good opportunity to break into a larger scale and market section.  5 year plan.  Offset risk with return

New Client Network

Great opportunity to work with an ambitious new client.  Potenital for future commissions as it has been noted that they are development.  Important to cement a good, professional working relationship early on.

Types of fees

Before a fee can be agreed, both architect and client should establish:

·       The project details and the services to be provided

·       The procurement method

·       An approximate construction cost

·       The project timetable

Percentage Fees

Fee based on a percentage of the full construction cost.  The percentage set will vary depending on the type and complexity of the job

Advantages:

·       Fee agreement can be agreed at the earliest possible time, even before the value or the extent of the building is known

·       In this method there is a built in mechanism to increase the fee if scope and therefore construction budget increases.

Disadvantages

·       Fee directly linked to the construction cost.  If construction cost decreases through a value engineering exercise, the architects fee would reduce too.  Need mechanism to have the ability to change additional fees for re-documentation due to reduction in scope.

Fixed lump sum

The architect and client agree on a fixed amount of money for an agreed scope of work.  In this method the fee is not directly linked to the construction cost but instead usually calculated in relation to the predicted amount of resources required to complete the job.  It is very important to clearly define the inclusions and exclusions, along with a payment schedule in the Architects appointment.

Advantages:

·       Client always knows what the architects fee will be

Disadvantages:

·       It is not always easy to calculate a fixed fee at the outset of a project, especially when the client is unsure of their requirements.  In this circumstance a percentage fee could be utilised and then converted to a lump sum when the scope of the work is known.

·       Higher risk than percentage fees.  Must have a defined scope and it is very important to have provision in the appointment for client changes

Time Charges Fees

The architect will change for work completed on an hourly, daily or weekly rate.

Advantage:

·       Useful when a client wishes to seek advice on a project, perhaps in relation to a feasibility study (however in this circumstance a lump sum is also common)

Disadvantage:

·       No certainty at the outset of how much the fee will amount to, although this disadvantage can partially  be overcome by setting an upper limit which can not be accessed without approval.