Architect and Contractor Fees
By Scott Somers, NCARB, ARCH-101 Architects, Designers, Advocates; Coeur d’Alene, Idaho
- Clearly understand and verify what is and isn’t covered in the architect’s fees.
- Ask detailed questions about the contractor’s bid to avoid hidden costs at the end.
It is important to understand what services are included in an architect’s fee as there is not an industry standard. Basic architect services normally are 5% to 10% of the cost of construction. Since architects normally coordinate and procure all engineering services, some architects include these services in the quote. When these services are added to a fee quote, it is referred to “full service.” Full-service fees often fall in the 8-13% cost-of-construction range. Again, these are simply rules-of-thumb fee ranges as job-specific services will be included in a fee proposal.
Question in detail what is included in any design quote. If you are requesting quotes from a number of firms, there is no clear way to compare fees unless all have been requested to provide the identical services, In addition, each firm provides a different value. It is best when a firm’s natural values align with the client. For example, if your most important project goal is to win a design award, you should align with a firm who wins awards. If a major project goal is to get a project that meets your budget and personal vision, align with a firm who is flexible and works with you closely to create exactly what you want.
It is always best to first select the firm you want to work with, and then negotiate a fee that is mutually agreeable. The inherent value of an architect is found in the service and guidance they provide, which the client also values—not in their fee.
When shopping for an architect, it is very important that you verify what is and what is not covered in their fee.
5 Important Questions to Ask an Architect Regarding the Fee Proposal:
- Engineering: What services are included and which are excluded? What about landscape design or other services?
- What level of support is included during construction?
- Are interior design services included? If so, what exactly is included and what is excluded?
- Does the architect understand the construction budget? What happens to the fee if the design does not meet the budget?
- What if the architect’s design does not meet your expectations? Who pays for re-design?
Lastly, do not make the mistake of hiring an architect or designer who is not experienced in orthodontic design. I am often hired to correct designs. Do not pay twice.
Contractors charge very differently than architects. They normally include the cost of the construction, and then add another percentage for overhead and profit. Before 2008, it was common for contractors to charge 8% to 13% for new construction, with fees for remodel work being 10% to 20%. Today, these fees have been lowered, and it is common to see between 3% and 8% for overhead and profit for private work.
For example, if a project is $500,000 to construct, an 8% profit for a contractor is just that … profit. This would equate to a $40,000 profit. But when an architect charges 8% to design a project, their fee is all-inclusive. The fee for the architect under this scenario would also be $40,000, but roughly 10% of this would be profit, or $4,000.
It is very easy for a contractor to “hide” costs in a bid. Architects can help their clients determine the true costs of the construction versus contractor overhead and profit. When projects are competitively bid, these differences are highlighted. When contractors receive negotiated projects, it is much more difficult to scrutinize how they are charging for their work.
Question in detail the services that are included, or generally excluded in a contractor’s bid. The contractor may have added charges for supervision, overhead fees, mobilization charges, insurance and other charges that are not at first apparent. These costs are real costs of any project. The key is to understand what is included in their definition of the cost of construction and what is not, and what receives a mark-up for overhead and profit.