Architects’ fees can seem expensive, and out of reach to many. If you’re planning on using one, here’s 10 tips to be aware of so you don’t overspend.
In the last post, I explained what a percentage fee is, how it works, and why its industry standard to charge for architectural services this way.
I also outlined some of the reasons I don’t charge fees based on a your construction budget.
I’m in a tricky position here – and nervous whilst I write this.
As an architect, I’m not supposed to contest what goes on in my industry. But …
Whilst I understand why architects structure their fees as a percentage of the construction cost, when it comes to individual home projects, I struggle with it as a sensible way to charge.
This is because of the inevitable question that always comes up in working with a consultant who charges this way …
If my budget goes up, they get paid more – what’s to stop them from driving up the budget so they earn more money?
The general negativity around using an architect usually lies (whether true or not) around their ability to deliver a project on budget.
For me, the structure of percentage fees perpetuates this notion over and over again. And the fact that (as is what’s occurring at the moment) as building prices increase rapidly, the total architectural fees increase also. However, it’s how most residential architects charge.
So this is my advice for negotiating and managing fees with your architect or designer.
As I explained in my last post, it’s extremely rare for a client to want less. In my experience, the whole process of working with a client on their project involves keeping their aspirations in alignment with their budget. This can involve a lot of pushing back on my part.
This may sound strange but …
I’m a mum. I’m used to saying ‘no, you can’t have that’. I’m also honest. Brutally so. So I work with my clients along these lines.
They say “I really like this [insert expensive material, massive kitchen, high-end product]”. I say “no, you can’t afford it”, and we all have a laugh and keep going. (I’m being cheeky, but these type of conversations do actually occur!)
However, my discussions with homeowners who’ve used other architects, and with architects themselves, show that this conversation can go more like this …
Client: “I really like this [insert expensive material, massive kitchen, high-end product]
Architect: “That’s probably not in your budget. It will mean roughly $$xx in cost.”
Client: “Well, can we include it in the builder’s quote to just check?”
Architect: “Ok”. [Sends email to confirm conversation in writing]
So it gets included. This conversation occurs countless times across the myriad of decisions involved in creating a new or renovated home. The project moves forward, the client falls in love with the design and how it’s shaping up. And in that flow of activity and decisions, they can forget all those ‘little’ extras that got added in, and the decisions that led to other (more expensive) decisions along the way.
A few months later …
Builder: “Your quote is [insert price that’s 1.5x, 2x or 2.5x budget]”
Client: “What the? How did it get so expensive?”
Architect: Shows all the written correspondence signing off the client’s decisions
Client: Furious / disappointed / frustrated / overwhelmed … Then has to decide whether to a) stretch their budget b) rework to pull it back to meet budget c) start again or d) give up.
Architect: Charges more fees and back-dates the extra fees according to the agreement (or charges them forward as per the agreement so the client can terminate services).
This may offend some readers (both in the industry and not) but here goes … Here is where it gets sticky …
If this is you, or you’ve heard this story, it’s not all the architect’s fault.
- The architect is doing what is within the scope of the legal contract that was signed with them.
- Clients sign onto agreements that state all of these requirements upfront.
- If the architect is advising you each time you push the budget (in writing) they are fulfilling their responsibilities professionally.
- The architect is the consultant, not the parent. If they advise it’s outside the budget, and the client agrees to it, then expect the quote will be higher than what was budgeted.
But architects share their blame too …
- The budget is as significant a component of the brief as any other input from the client. So not meeting it is a big deal.
- If you don’t keep track of (or say no to) every client decision and choice to overspend the client’s budget, then the client has a right to be angry.
- If you overspend the client’s budget (knowingly or otherwise) via your own design means, then the client has a right to be angry.
Architects will say to me “But if they increase their budget, they’ll pay in variations anyway, so they pay more regardless. The percentage fee gives everyone flexibility”.
And this is true.
What IS different, though, is the mindset.
A fixed fee sets expectations. Limitations. Boundaries around what is included, and what isn’t. Flux and change still occur, but the whole mindset requires these changes to be tested with much more rigour and discipline. Because at each change, there’s a variation to the agreement – a fee is put together, and a cost put against it. It forces much more consideration and pause.
A percentage fee sets flexibility. Flux is built in. Change is pre-set to be accommodated. So things can keep moving, and flowing, and progressing without too much interruption (except to quickly confirm ‘yes, that’s ok’).
So you may not be able to change the fee structure – but be sure you (client and architect) approach your working relationship with the best mindset if meeting budget is a key criteria.
It’s industry standard, so how do you get the best for your project?
You could consider the following:
#1 Ask if they’ll structure their fees differently.
This could be as a lump sum. This will require you both to outline the required work in detail for the duration of the project, so expectations are clear. It will also mean that any variations to that work can be done at higher hourly rates, or will need to be priced and approved as you go.
Understand this can slow down the process overall, as it takes time to estimate variation fees, and get your approval prior to the work being carried out. Expect if you change your mind, change the brief, change the design … there will be variation fees.
#2 Consider whether you want to use the design consultant for the entire project.
You can hire an architect or designer for partial services, and this may suit your needs and budget more closely.
Designing, drawing and delivering a project – be it a new build or renovation – involves various stages. These can have slightly different names depending on who you work with, but cover the same type of work.
A portion of your total fee is attributed to each stage, and how big that portion is reflects an understanding of how much time and work is involved to get through that stage.
You can choose to have them on board for only certain stages. Check out askanarchitect for more information on what occurs in each of these stages.
#3 Set the expectations
Ask the architect to manage the project with clear and open communication.
Ensure they will put up a red flag as soon as it appears to be going over budget. (A good architect will do this anyway, and provide this advice in writing).
Be disciplined and listen to their advice. That’s what you’re paying them for.
#4 Have an exit strategy
Be sure you can stop work at any stage you choose and terminate the arrangement, and own everything up to that point (digital pdf and cad files also).
Understand where you’ll have to pay up to and based on what budget (the quoted construction price, or the initial budget you set) if you terminate the agreement part way through.
(NB: Design consultants generally own the copyright and license you for its use on your project. See here for more info on copyright and read the pdf download.)
#5 Be involved
A lot of cost estimating in the design phase is based on prices / m2. Make sure the design drawings always have the areas on them, so you can keep a running tally of overall cost based on your research, advice you’re receiving and rates / m2 for building or renovation costs.
Don’t underestimate how much work is involved in designing, documenting and delivering your renovation or new build. Be across it, and partner your design consultant in the journey.
#6 Be aware of the little decisions you’re making along the way that lead to other decisions – and cost increases overall.
For example, choosing high ceilings can mean more expensive glazing, more internal finishes, extra scaffolding, extra lighting etc. One decision leading to more that create higher costs overall.
Ask the architect to explain to you the ramification of your direction and decisions – to educate you. Set the expectations up front that you wish to have this type of communication with them.
#7 Communicate that your budget is part of your brief
Be confident through communication that the architect understands that the budget is a critical component of your brief. It is the architect’s role to deliver on ALL components of your brief.
#8 Don’t get surprised by other costs
Remember that the architect’s fees won’t generally be the only costs you’ll have to budget for. Factor these in upfront (ask your architect for guidance).
Other consultants you could require include:
– structural engineer
– town planner
– geotechnical engineer
– traffic consultant
– heritage consultant
– interior designer
– hydraulic engineer
Who is included and to what extent can depend on where you live, your council requirements, how much work you are planning, what the budget is, and who you want on your team.
#9 It’s ok for the architect or any other design consultant to make money.
This may be challenging to accept when that money is coming out of your pocket, but you do want anyone on your team to be making money from being involved in your project.
Making money is part of good business operations. Anyone who is not can be under business stress, making poor decisions and not doing great work.
Just because they’re charging more (if your budget goes up) does not necessarily mean they’re making more profit. There is, and will, be more work involved. Interestingly, a client (who really grappled with the % fee structure early on) is working with a Sydney-based architect and told me recently that he can’t believe how much value he is getting for his fees because of the amount of work involved.
I’ve seen homeowners not even bat an eyelid at sinking $20,000 into the plumbing costs for their home – yet are really challenged by the idea of spending that on a design consultant to create the design for their home. Perhaps it’s because the pipework that takes your effluent away is seen as non-optional, but design fees are.
Design sets the bones for your home, the foundations, and embeds all the important qualities of how it will be to live in.
In my view, the quality of your life is not an optional extra.
#10 Be accountable
This is said with love …
A lot of clients ‘forget’ that they approved design proposals and elements within them along the way, knowing that their budget would be increased. Don’t get swept away by the process, don’t think it will ‘all be ok at the end’, and don’t put your head in the sand. If you are advised that your decisions are driving the design over your budget, and you say “yes, keep going”, expect that your tenders will be over your budget.
Don’t play games with how you share your budget either. If you can create a trusting relationship with your architect or designer, they can be your secret ally in navigating this whole process. If you tell them you have less money to spend than you actually want to – because you think it’s the only way to control the process – it does not bode well for establishing this trust. Be sure to let them know whether your budget has to include your contingency too (or whether you have that set aside).
A final note to the designers …
Treat the responsibility of investing your client’s budget as the true privilege it is. They are trusting you to bring their dreams for their home to life, and usually staking years of saving, or years ahead of paying a mortgage, on this very dream.
The fact they even come to you, are willing to put their home in your hands, is a gift and honour. Remember it is their home, and their money. Please don’t perpetuate the notion that architects only design what they want, and only design expensive homes (unless that’s what you make your business doing!)
Be honest, educate them, take care of them, and guide them. The world needs great design because it makes our lives better. Don’t blow the opportunity to help a homeowner create a home that improves their life, by crippling them financially in the process.
And to the homeowners …
It is up to you to manage the architect, as much as it is up to the architect to manage you. Open, honest and frank communication is seriously the best method to do this from the beginning.
Be clear from the outset that the architect is to work efficiently and economically to deliver your project ON budget.
As I’ve said, the higher the budget will generally mean more work – it’s just whether this work needs to occur in the first place.
Designing a compact, clever home will be much better for you as an end product anyway. More efficient to build, live in, maintain and own. Question what you’re seeking to achieve overall, and have discipline in executing it.
There are great designers out there, doing honest and quality design work. As a homeowner, you can find them by hunting well and looking for likeminded, reputable team members.
When you find them, shout their names from the rooftops – they deserve to be endorsed and recommended for the work they do.
And give yourself a pat on the back too, for taking the leap to change your home, and the life it helps you lead.