Fees - Being Able To Do What An Architect Should Do
The issue of fees is one of the most significant problems facing the profession today. In the first of three articles, Peter Sarlos outlines the challenges of calculating fees and conveying the value of an architect's work to clients.
Architects’ fees are a constant topic of discussion, particularly since the Australian Institute of Architects withdrew the Fee Guide, which professionals had, to a large extent, relied upon. The withdrawal occurred as a result of concerns expressed by the Australian Competition and Consumer Commission (ACCC) arising from the Commonwealth Government’s Competition Policy.
Since the withdrawal of the guide it has become increasingly difficult for many architects to justify their fees to clients, particularly clients who lack an understanding of the processes, obligations and restrictions on the practice of architecture. The lack of guidance deprives the architect of certainty in understanding how many hours to allow for completing the architect’s responsibilities when making a submission for a project.
The tendering system currently in place forces architects to submit prices that in many cases do not allow sufficient time for the proper practice of architecture, forcing architects to make compromises in their services. As a result, they become exposed to risk – minor errors in specifications or detailing opening the architect to risk of litigation. (This is a very real scenario. See, for example, Dymocks v Capral  NSWSC 514 in which an architect was successfully sued for $750,000 due to the inappropriate use of a standard dissimilar metals specification clause).
British architects have the advantage of a series of documents prepared by The Fees Bureau, a UK market research company, which provides detailed fee and performance data to architects in the UK. The publications, available at some cost through the RIBA Bookshop, or directly from the Fees Bureau, include the following:
The publications provide survey data of costs and resources required to provide architectural services for different project types (for example, housing, leisure, commercial, retail, public housing, health, education) for new and refurbishment work measured against hourly rates. The long-term data included in the publications indicates what most of us know. The Architects Fees 2011 indicated a statistical decline in fees earned of 11% between 2008 and 2010) and a similar decline in hourly rates of 1% between 2009 and 2010.
While the publications are expensive (the 2011 publications cost about £195 each), they provide accurate information backed up by in-depth statistical UK data, which can be readily interpreted to the Australian environment. The studies provide valuable data, which can assist an architectural practice in determining its resourcing, capacities and limitations. Because of the knowledge that the guides impart they become valuable tools in advising clients, managing risk and facilitating profit. The Fees Bureau also offers the Fees Bureau Calculator, which makes all the data from the print publications available online.
Peter Sarlos is an architect, lawyer and chartered surveyor. Peter’s other two articles on fees cover getting paid (security of payment) and professional indemnity insurance. This article was first published in ACA Communique, September 2013.