Architectural Fees - Hybrid Projects

My experience is probably a lot like yours - things are never as simple as they seem. 

Projects, for instance. It probably took me 15 years to realize that a project wasn't a project most of the time. It was actually two or three projects masquerading as one project. A Hybrid. The difference isn't great, but it is enough that it should be recognized and dealt with.

The Hybrid Project usually complicates code compliance when you are dealing with two Building Groups - or Use Groups in code-speak. Fire separations and mixed use requirements suddenly appear. Another type of Hybrid Project is one that is an addition. That is because you have a part that is 'new' and a part that is remodeling. Specifications and detailing usually get a bit more complicated to address the different parts of a Hybrid Project.

Two or three Building Groups is the typical way that we encountered a Hybrid Project. Some examples: 

• an office/warehouse building 
• retail space with residential above
• an owner-occupied office building with undeveloped floors for rental or expansion

In my experience Hybrid Projects were much more numerous than straight-up new buildings. But it was ages before we recognized the impact on our architectural fees.
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Architectural fee tables don't address Hybrid Projects. The obvious solution is to pick the most complicated Building Group and use that fee for the entire project. The least complicated Building Group would clearly make the architectural fee too low. But the most complicated Building Group makes the architectural fee ... also TOO LOW!    How can that be?
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Let's look at an example. 
The project has two Building Groups.
The first part is Building Group II, having 20,000 SF at a cost of $200/SF, or $4,000,000. 
The second part is Building Group IV, having 10,000 SF at a cost of $100/SF, or $1,000,000. 
So the total project cost is $5,000,000.
If we base the architectural fee on Building Group II, the fee percentage is 6.1%. The fee is $305,000. Looks pretty good.

Fee Tables Work Like This

What happens if you treat each part as a project and add the two results together?

Well, surprisingly, you get a fee of $312,000.

Here's the math:
​The first part is 6.2% of $4,000,000 = $248,000.
​The second part is 6.4% of $1,000,000 = ​$64,000.
Total $312,000.

A Hybrid Project is actually two smaller projects. Smaller projects have higher fee percentages as you can see in the image above. So, Hybrid Projects present a complication in determining architectural fees. When you simplify, you may hurt your bottom line.​

This is the fee table that I used in my example. Click to enlarge. Or get a copy here.

There are situations where you are better off using the more complicated Building Group - usually when it represents the smaller part of the project or when the project is quite large. However, that higher fee may make you non-competitive. In any event, being able to see your options is always a good thing.

I think that this clarity is a really good feature of using fee tables to calculate architectural fees.

This ability to deal with Hybrid Projects is baked into FeeCalqs, my digital fee calculation workbook that went on sale earlier this year. The image above shows how FeeCalqs addresses Hybrid Projects. You could easily re-create this spreadsheet and link it to your fee tables with some 'lookup' functions. There is more to FeeCalqs than just this feature, which you can check out here.

Whether you use FeeCalqs or not, keep the Hybrid Projects concept in mind the next time a project comes along. Your bottom line will thank you.

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