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The traditional architectural fee was a percentage of construction costs. The baseline fee was 6%, but the percentage decreased as the construction cost increased; and increased as the construction cost decreased. The fee was allocated most often among the phases of Basic Services of the project like this: 15% - Schematic Design 20% - Design Development 40% - Construction Documents 05% - Bidding 20% - Construction Administration See this download for a sample fee schedule. Although this fee arrangement appears to reward the architect for running up the construction cost, there has always been a simple counterbalance. The contract can set a limit to construction cost. Over this limit it is the architect’s responsibility to re-design at his cost. This is a serious incentive to stay on budget. Where this method breaks down for the Owner is the Owner’s inability to provide a realistic budget. I would say that Owners, who have not been through the process before almost never provide this counterbalance because they have no idea what the project will cost. For this type of Owner there is a real need for someone (the architect?) to lead them through a planning process to set the budget. Where this method breaks down for the Architect is the Architect’s inability to control the scope of work in Schematic Design and in Construction Administration. Schematic Design often takes too much effort because the Owner doesn’t have a written program. This causes all kinds of schemes to be done to discover the project’s needs. Or worse, a scheme is ’sold’ to the Owner and endless changes crop up throughout the project as needs are discovered. This remediation of the design might extend through construction. The solution is to provide Programming for the Owner as a separate fee. Construction Administration takes more time than allotted by the fee because the contractor, the low bidder, proves unable to build the project without excessive hand-holding, changes, or re-dos. The solution for Construction Administration is for the architect to specify the number of hours that are included for site visits, phone calls, meetings, and submittal reviews. After these hours have been used, additional time is billed on an hourly basis. A third way that the fee as a percentage of construction cost breaks down is the number of ’new’ services provided nowadays that don't fit the percentage method very well. LEED certification, commissioning, and civil engineering are the most common. By hearsay LEED certification adds 2% to the costs, and commissioning can add 5%. But these numbers relate to the ’average’ project. What is average? What percentage applies to your project? Using the fee as a percentage of construction cost method is still a viable fee structure. It is just that projects are more complicated than they used to be. Other articles on fees:
David
10/31/2014 06:43:14 am
When you refer to a percentage of "construction costs" how does that work on a commercial rehab project. The building will cost 750,000 to purchase and the estimated construction costs will be 500,000. Would I estimate the archtect's fee to be a percentage of 1,250,000 or of 500,000? thanks
Rick Wolnitzek
10/31/2014 06:57:55 am
You would use $500,000. The percentage fee would be higher than for new construction though, as the sample table mentions. You might justify as much as 1.5 times the fee if the renovation is complicated. The fee schedule is for schools and a school renovation is straightforward compared to many commercial rehabs.
David
11/1/2014 12:51:38 am
Thanks! 8/22/2015 09:30:05 pm
Rick,
Rick Wolnitzek
8/23/2015 06:16:07 am
Greg, 10/26/2015 03:20:43 pm
Rick,
Rick Wolnitzek
10/26/2015 04:32:29 pm
Greg,
Patrick Touchet
12/29/2017 01:49:36 pm
Greg's analysis of the shift in fee percentage for BIM is correct, but as a semi-retired practitioner I don't use it yet (I did have Revit training a few years back). From discussions with other architects, it seems that BIM as a delivery is on the rise, even in smaller practices. Soon I'll have to follow, no doubt.
J
1/4/2017 03:10:29 pm
Hi. The 6% baseline for architectural fee may be a bit misleading - I understand 6% is for new bigger construction projects where as for renovations, residential or otherwise are more closer to 10% - 15% in my experience.
Laura
4/12/2018 01:22:26 pm
Thanks for the helpful article. I am composing a proposal which will be set up hourly-not-to-exceed a maximum fee as a percentage of the project cost. I'm not certain: is the contractor's fee and the permit fee part of "project cost" or excluded, like consultant's fees? 4/12/2018 01:47:32 pm
Laura,
Carlos
1/28/2019 05:41:42 pm
Thank you for the time to compile this, it's very helpful!
Stephen
2/2/2021 02:18:45 pm
With the fee percentage based on the construction cost, how do you handle municipal projects that are tax-free on materials? Would you figure the construction cost as if it was a private job with taxes included.
Rick Wolnitzek
2/2/2021 02:41:13 pm
If you are successful in getting the commission, then the actual construction cost would be used. To adjust for lack of taxes, you might adjust the percentage fee. Having said that, my experience is that public work costs more because of bonds, insurance, and mandatory wage rates. Comments are closed.
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