architecture fees - explained

It is important that you begin a dialogue about fee structure and expectations with your architect right away.  There are many different structures an architect can use to bill for his or her services.  By introducing to discussion early in the process both you and the architect will be more comfortable with the discussions down the road.  A few examples of how an architect may set up their fee structures are:

hourly rate:

This is pretty straight forward.  In your contract an hourly rate will be proposed and agreed upon.  You will receive a bill at a set increment (for example, once a month) based on the amount of hours worked on your project.

flat rate (lump sum) 

With a lump sum fee your architect will use a unit to estimate how much his or her fee will be.  For example, estimating the amount of hours it will take, then multiplying it by his or her hourly rate.  Another unit could be using a percentage of the construction budget (if known).  Typically ranging from 10%-15% of hard construction cost. 

You will then be charged a fix fee for the entire duration of the project (unless you approve additional services beyond the initial Agreement).  This is appealing because you know up front the fees required for architectural services.

hybrid  

The hybrid structure combines an hourly rate and lump sum.  In the hybrid model, an hourly rate is set and billed during the early phases of the project while total scope, design, and budget are being determined.  Once the project enters a specified stage and the scope and budget are fully understood the architect will produce a lump sum fee based on the now understood scope and budget. 

Typically speaking, any of the lump sum fees will be broken down by project phase.  The project design phases and typical fee breakdown are as follows:

1.    Predesign (Conceptual Design) – Hourly
2.    Schematic Design – 20%
3.    Design Development – 20%
4.    Construction Documents – 35%
5.    Bidding and Negotiation – 05%
6.    Construction Administration – 20%    

[ fee example ] 

In order for you to understand the aforementioned fee structures and breakdown here is an example of the hybrid model. 

You have an idea of the size and location of your new home.  You sign a contract with an architect and begin predesign services.  For the duration of predesign the architect will bill you at a rate of let’s say $125/hour.  Therefore, if predesign takes about one month and 80 hours of the architect’s time the total would be $10,000.  

Once the predesign phase is completed and the architect has a better idea of scope and size a proper construction estimate can be completed.  The estimate comes in at $500,000.  

Therefore, at 10% of construction costs, the total architecture fee for the remainder of the project would be $50,000 (minus the predesign sum of $10,000).  This will be broken up into the proper phases as mentioned before:

1.    Schematic Design – $8,000
2.    Design Development – $8,000
3.    Construction Documents – $14,000
4.    Bidding and Negotiation – $2,000
5.    Construction Administration – $8,000

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