Fee Schedule Concept

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The chicken or the egg

If you specialize in one project type, your past experiences give you a solid basis for determining fees. But what do you do until you have past experiences to draw on? When you don't have a comparable project to use for gauging the right fee, a fee schedule gives you a way to arrive at an appropriate fee for your project.
Even where you have a similar project, the size or some other aspect of the new project might be significantly different.

The standard fee

The world likes 'simple'. I think that is where the myth of the standard fee comes from. I know I have heard "6%" suggested as the standard architectural fee on several occasions. History sheds some light on where the 6% fee arose.

In the early 1860s Richard Morris Hunt established a standard fee by accident when he sued a client for non-payment of his 5% fee. In short order, this fee became well known; and most architects adopted the 'new standard'.

In the late 1800s as buildings became bigger and taller, the legal precedent was set for holding architects responsible for major structural defects. The standard fee crept up to 6% over the next decade or so. By the early 1900s, 6% was well established. 

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​Leading up to the 1950s architects were noticing that the same fee for every job wasn't working. The AIA began addressing the fee situation by establishing the concept of a fee schedule.

You don't find any broadly accepted fee schedules ever since the Department of Justice brought price-fixing charges against the AIA in 1972. 

So you are on your own nowadays.

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Scope of Services 

When you adopt the concept of a fee schedule, you need to standardize the Scope of Services that the fee schedule is based upon. The owner/architect agreements nail this down by establishing 'Basic Services' and what tasks are to be 'Additional Services'.

Basic Services
The five usual phases of design services are:

• Schematic Design develops a design concept
• Design Development creates a design from the concept
• Construction Documents produces detailed documents for construction
• Bidding procures construction services  
• Construction Administration manages the construction contract

Here is a more detailed description of Basic Services.

A standard scope of services is key to establishing a fee. It forms a benchmark for measuring how the project type and project scale impacts the fee.


Here's How Fee Schedules Work

First determine complexity by choosing the group of building types which represents the current project. This is unavoidably subjective. See sidebar. 
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BUILDING TYPE GROUPS
GROUP I       Monumental buildings, custom residences, and other facilities requiring consummate skill and much precise detailing. Examples: museums, custom furnishings.
GROUP II      Structures of exceptional character and complexity of design or requiring comparatively large amounts of scientific, mechanical and electrical equipment. Examples: hospitals, aquariums
GROUP III     Structures of moderate complexity of design requiring a moderate amount of scientific, mechanical and electrical equipment.
GROUP IV      Structures of conventional character and detail, requiring normal design, detail, mechanical and electrical equipment. Examples: apartments, manufacturing plants, office buildings without tenant improvements.
GROUP V       Structures of simplest, utilitarian character which are without complication of design or detail and require a minimum of finish, mechanical and electrical equipment. Examples: warehouses, parking garages.

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Second estimate construction cost. Since the design hasn't begun yet, this is usually based on the client's budget.

Third determine the appropriate fee percentage from the fee schedule. 

Fourth determine the amount of the fee.
The formula is:
FEE =  FEE PERCENT X CONSTRUCTION COST 

The final consideration is to watch for changes in scope that would significantly change your fee. A big change might involve a new percentage for the fee.

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That's the concept. Not terribly difficult. 
This is step one is creating your own unique fee schedule. Download a Sample.

Next up - a closer look at the five tables used to generate the fee percentage. 

See this link for More on Fees 

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