I am looking at this one from the outside so not much detail.
Clients commision architect to design a large high end custom home in 2003 in an upscale area. From what I have been told, they gave the architect a budget of one million dollars. I do not know if meeting the budget figure was contingent on his getting paid.
I have seen the plans, my wag to build this house would be 1.8 to 2.4 million, in 2003 money maybe a bit less. I don’t think it could ever be built for a million. The plans were done with the clients approvals and modifications. The house as drawn far exceeded their budget. I believe they had a contractor produce another set of plans with their budget in mind. I have not seen that set but the size and scope of work has to be vastly different from the first set of plans.
The clients have retained attorneys to recoup their payments to architect. I think the architect must have had his head in the clouds to think his clients could get this type of home for their expected budget. The clients did have about a year of design input and discussions of what they wanted.
My opinion is the architect should be due a majority of the fee based on the design he provided. There may be other details I am not aware of that could change my opinion.
Replies
In terms of getting paid, what matters is what the contract between the architect and the clients actually stipulates. The standard language is designed to protect the architect a little more than the clients.
Bill
I think it's one for the courts. The archie obviously isn't entitled to his entire fee, but certainly deserves something. Given that a jury would likely be more sympathetic to the clients, the attorneys will probably work something out before it gets to a trial.
Clients should have structured the payments differently, probably, to withhold more prior to bidding, though the archie has to protect himself from clients who decide to drop the project prior to bidding.
happy?
I started to read the depositions. Architect had a letter of agreement with the clients for a % of cost based on $200 per sq. ft, based on the proposed sf. Bids came in higher than $200 per sf but fee is based on estimate.
Clients were involved with design process and specificaly asked for items and features that were provided in plans. Actual bids were 15% low bid to 30%high bid over estimate.
Architect was paid a substantial portion of fee already as progress proceeded.
Architect was paid a substantial portion of fee already as progress proceeded
Which is a typical/traditional model for billing the fees. The rule-of-thumb I was taught was 5-20-25-40-5-5. That's 5% for the 'beginning' stuff; 20% for the schematic design; 25% for the design development; 40% to create the bid documents; 5% for the job supervision; and the last 5% the completion "hold." Those percentages are of the whole fee--setting that number being subject to a number of other things.
So far, it sounds like the clients got what they paid for--even if not what they budgeted for. If they used the standard AIA contract for arch services, they're likely hosed (it's not a little biased in favor of the archy, it's all biased; about 95/5).
Now, if the archy wants the fee base to go up 30% to match the bids--that's likely not going to "go." Part of the quaint nature of pricing this way is that you gotta take lumps every so often.
So, clients may want to gripe that the estimates are 30% low. AIA contract will say that's the number they negotiated the contract for, that's what the services cost. The archy is limited by that same thing, as well; he's "losing" 30% of the fee. Roll the dice, that 7 is as likely as a three.Occupational hazard of my occupation not being around (sorry Bubba)
"Which is a typical/traditional model for billing the fees. The rule-of-thumb I was taught was 5-20-25-40-5-5. That's 5% for the 'beginning' stuff; 20% for the schematic design; 25% for the design development; 40% to create the bid documents; 5% for the job supervision; and the last 5% the completion "hold." Those percentages are of the whole fee--setting that number being subject to a number of other things."
That is about what his fee schedule was. I think the clients were hung up on a $200. per sq ft estimate. Based on the square footage times that figure they had a preconceived notion of the what the project would cost. The lawyers are also stuck on square footage numbers.
The archy was not looking for an increased fee based on the actual estimates. I think he used a figure that historically worked for him in the past and that is how he based his fee. In the agreement the original % amount was crossed out and a lower % was agreed to by the client.
If the archi original plans met the criterian and then the clients wanted and made changes then I would say that the archi should keep his fee. He met the requirements and then made requested changes which changed the parameters.
That all goes down to what they wanted, what was provided originally and then did the archi explain that any changes/upgrades would increase the price...
Info we do not know without a lot more details and look at the contract and change orders ...
My architect was not even close on the guesstimate sq ft cost w/o finish.
That's why they push papers around. They would get hurt with tools.
I'm glad the plan was a flat fee. We made a few changes along the way.
I suppose this is food for future thought. Perhaps people should put their budget in the arch's contract, and if builder bids come in at more than x % over that budget teh arch's fee would be reduced. It would force teh arch to get an education and do a complete job. I can see where someone would be bent out of shape if an arch gave them a set of "UNBUILDIBLE" plans and expected to be paid.
>Perhaps people should put their budget in the arch's contract, and if builder bids come in at more than x % over that budget teh arch's fee would be reduced. It would force teh arch to get an education and do a complete job.One of the hardest things of all to do is calculate what a builder will charge. The builders I work with will typically not bid anything less than complete plans, including engineering. And I've learned the hard way not to trust a verbal. I've seen a contract value change from 120k to 206k without a change in scope. No explanation given. I've seen another jump 80k in a month, also with no explanation other than the builder re-analyzed his costs from a prior job. As a designer, how do I account for that stuff? I've had builders give a /sf guideline for me to work to, and by the time the design was finished, they'd decided to raise rates 50%. I've had others estimate the cost of building a certain wall assembly, yet found out later they never had a contract that didn't show at least double that. Had a caller tell of calling a company and being told $30k for an item, and calling the subsequent day and being told $60k by a different person.It would be wonderful if I could estimate the cost to build within X%. But let's say, I haven't found builders to be an especially predictable group. What to do?
sounds more like a shortage of competition in your area. or that all the builders have more work than they know what to do with.
carpenter in transition
Or that we're working on structures with still evolving methods and not a great history of cost-tracking. Plus, some of the designs have been stretching the envelop, and there's just not been an easy way to know how much labor the project would require. The most notable examples have ALL had large owner involvement--makes estimating turnkey difficult. The best guess has been to extrapolate from a prior project, but with the wild fluctuations in the costs of our materials and designs, that's not always worked so well. Sometimes it's that the builders just seem to do WAG's on the costs; other times my designs cause the problems be/c there's not a lot of relevant prior history from which to draw.
My two cents: the archi deserves every penny and clients are fools.
Something similar, but smaller in scale, came up on Judge Judy of all places and her ruling makes sense here too.
The story: Homeowner talks with gardener to clean up and install landscaping in front yard . Gardener cleans and picks out a whole bunch of plants and small turf area while the homeowner watches the whole process from his front porch . Gardner suggests he install sprinkler system with timers and such and the owner watches him install that too. In the end, the front yard looks great and everything is perking alone fine until homeowner gets the bill and notes that there was an $850 expense for sprinkler system. Owner refused payment on sprinkler cause he said he didn't specifically authorize the installation of that part landscape. They go to court and in short the homeowner loses big time. Why...judge stated that the homeowner watched the whole project from start to finish and didn't stop the gardener from installing the watering system when he watched him doing it. Since the owner didn't say, "no, don't install the sprinkler system", he , in essence, agreed to the sprinkler install even though he didn't ask for it in the original agreement.
Same applies here I would think. The owners saw the plans, the owners approved the plans and the owners even made changes to the plans, which the architect drew into the design at their request. They saw what he was doing, they knew he was doing it and they just didn't realize the eventual cost. Sounds like an adult version of a little kid wanting something but the only problem is, the child doesn't have the cash to buy. End of story. The architect did what they asked him to do. His work was done to their specs and so, now, they must pay.
The archie has some responsibility to work within budget. What's not clear is how clearly the budget was expressed, and to what extent it was made clear to clients that requested changes would increase the budget.
If ignorance is bliss why aren't more people
happy?
The situation depends on a lot of factors, including 2003 prices, changes made, materials used, the archi's expertise in estimating, etc. If the client waited to build based on their finances or change orders, they shouldn't expect the house to cost the same. If they switched to more pricey materials, it will obviously raise the price. If the archi has little or no experience in estimating, he should have told the clients about this and gotten help from someone who is better at it. If nobody in this discussion was there from the beginning, all we can do is speculate because we're only hearing part of the story. It would be interesting to hear the archi's side to balance it. It could be that the clients had no clue about the design/build process and should have done some research before contacting an archi. They may have had no idea about what they wanted, needed, could get for the money, etc. $1M @ $200/ft is 5000 sq ft, but I'm not sure where the $1.8M -$2.4 comes from. Did they drastically increase the footprint and/or change to pricier materials to see this much of an increase?FYI- some archi's actually know how things are supposed to go together and can do it themselves. I happen to know some who fit in this group but you guys are going to have to your own.
"I cut this piece four times and it's still too short."
Edited 4/5/2006 8:27 pm by highfigh
I have recently worked with an architect that was very knowledgeable about construction technique, design and engineering. On the last high end project he based his estimated costs with the clients on projects that he had done only a year prior.
But with changes and increased cost from subs and material suppliers over the last year the budget has been blown out of the water and the clients can't under stand why.
We've had drywall subs tell us they had 5 material price increases over the last year. The same with plumbers and their materials....piping, steel, concrete...you name it.
How can anyone today give an exact cost for a high end home?
They can't!
I suggest that Owners find their "Contractor first!" One with a good rep, has just built similar projects that the Clients are looking for and find out cost from them and what the cost could possibly be in the next year for that same project. Then find your architect or designer and the contractor can help with the structural design of things to maybe help give other ideas for construction that may be easier to build or faster. Not that every contractor knows how to do that but any good should.
But ...even then until the day you build it your cost may still change.
The cost per SF these days has no relevance.
Just my two cents!
Howie
Edited 4/5/2006 9:21 pm ET by howhighlites
That's the reason they call it an estimate. There are cost books and software for estimators, and they're constantly being updated. If the archi wasn't aware of the most recent increases, he needs to get up to speed ASAP. I have one friend who designs mostly commercial and industrial buildings and his company has estimators who do nothing but that. His company designs, builds, has a structural, mechanical and electrical department, interior detonators, landscape designers and can take the project from initial consultation to completion. They are very good at cost containment and I don't remember the last time he said one of their jobs came in over budget by very much. Another friend works for one of the larger archi/engineering firms in the world, and they do a lot of power company work, government and international work. These are obviously on a completely different scale from the house in question, but it illustrates the point- whoever designs the house needs to be very aware of material and labor costs. Otherwise, it's the SWAG method and nobody is going to win.
"I cut this piece four times and it's still too short."
Your talking about large company's with high volume from which their estimators can base construction costs.
By the way...would be very interested in seeing these professional estimators techniques and skills for estimating.
But when your talking small Contractors and Architects the costs are very hard to keep constant unless you do repetitive work. You and I know what estimate means but I think very few owners see "estimate" as a varying number even if it is explained to them. Not because they don't understand but because they imprinted that first number into the back of their mind.
Howie
...has a structural, mechanical and electrical department, interior detonators,...
Oh, my!!! Somebody get the bomb squad on the phone, quick...
DG/Builder
interior detonators,...
Oh, my!!! Somebody get the bomb squad on the phone, quick...
<G> I'm guessing that's a reference to "inferior decorators" . . . Occupational hazard of my occupation not being around (sorry Bubba)
The 1.8 to 2.4 million is my guesstimate of what it would cost to build the house today based on a fast look at the construction drawings and knowing what similar home costs in that area would be. One estimate for sitework not including landscaping was over 90k.
The architect was willing to see where the project could be modified to bring the costs down, but the clients broke off contact at that point.
There are homes (mc mansions) currently being built up the road from me in the 800k to one million range in a new development. These homes are not even close in scope or size to the one in dispute.
Sounds just like the neighborhood we do work in.
I dont believe they're going to pin the whole of the miscalculating on the archy, especially if the client had input during the design process. The architect can only suggest finishes, its up to the client to decide what he can afford or what he puts out for bid AFTER the plans are drawn.
There are a lot of houses that can be built for half the cost if they settle for less costly elements in the design scheme. who's to say there's not a builder out there that wont take on the job for a million bucks
I dont think the case holds much water
"There are a lot of houses that can be built for half the cost if they settle for less costly elements in the design scheme. who's to say there's not a builder out there that wont take on the job for a million bucks"
The proposed garage had to be big and high enough to have a basketball hoop inside
Reading about this stuff makes me sick. So many designers design stuff that costs too much. I don't know where they get their pricing info but when I've been party to these situations they never seem to be able to back up their estimates. I was involved in pricing a job that was designed over budget, last fall. When it became clear that the budget could never work out for them, I sat down with the designer and went line by line thru my estimate, and asked him what he had estimated in each category. About 20% of the way thru (not even framing yet!) he threw up his hands.
As to your post, as others say it will come down to whether or not there was a contract and what it says. Hopefully the budget for the project is indicated in the contract. If not, the owners trusted the wrong guy.
Why aren't their more design+build firms?
I never understood why architects don't get into the GC role.
I work in the web industry. It's like having a graphic designer design your banking application and then sending it to the database/security/software engineers to 'figure it out' and expect it all to come together on time, on budget and actually work.
Seems to me that when it comes to me building a house, I'd want my architect working directly with my GC in the design phase to make sure everyone is on the same page.
These clients lived in another state. I don't think they had any preference for a contractor. The plans were given to three firms when they were completed for estimates.
If it was a design build project and the contractor was onboard at the start, I don't think the final cost number would be different than the bids. The owners would have to significantly change their design. If a contractor was on the team from the start and the client did not like the project cost, the client may find a lowball bid elsewhere. At that point I think the architect and design build contractor should be compensated.
Why aren't their more design+build firms?
I never understood why architects don't get into the GC role
Well, for a while there, that (at least from the published numbers) was the "growth" industry for new architects--Residential DB, that is.
Like most trends in the archy biz, it was over by the time it got into print, too.
Residential DB requires as much GC skill as design skill. It's hard to get that without experience (see where that Catch-22 leads you?) So, that leaves you, as an archi, with needing to find a partner who can GC. Oh, and if you do, you can wind up in "competition" with huge, national builders, at least in the bigger subdivisions.
Oh, and the GC is "glomming on" a high-overhead 'business unit' to his existing company, which can make divying up "profits" a bit dicey.
It winds up being a bit of a "specialty market" business niche.
That, and commercial work often has a much better profit margin for an archy office (especially with all of the the "competing" sources for residential plans).Occupational hazard of my occupation not being around (sorry Bubba)
72024.32 in reply to 72024.24
Why aren't their more design+build firms?
I never understood why architects don't get into the GC role
Some architects are good at what they do and should not do more than that. Expanding their role can make them lose focus on what they can do well.
The interior desecrator probably bumped the price up at least 30% LOLI do a lotta work for an architect/GC/developer...it's a pretty scary combination<G> Hey, pocket doors can't come off the track if they're nailed open
Wow, who came up with the color combo?
The labyrinth is cool, though. Must have been a pain to lay out, though.Occupational hazard of my occupation not being around (sorry Bubba)
--- I work in the web industry. It's like having a graphic designer design your banking application and then sending it to the database/security/software engineers to 'figure it out' and expect it all to come together on time, on budget and actually work. ---Well, that's not so far off from what often happens (I'm a software engineer)...Of course, what they expect and what they get are not always the same thing there, either. As with construction, you can often get two of the three. And as in construction, a big factor in the customer's satisfaction with the end result is the appropriate setting of expectations early in the project and communication throughout.Rebeccah
"I never understood why architects don't get into the GC role. "
why take the risk?
They can get paid to draw the unbuildable ...
and get paid for doubling or trippling the stated budget and them blame the damn expensive contractors and all the material price changes ...
haven't ya been reading along?
me ... if it's a cut and dry ... they said a $1mil budget ... and they ended up with a $2.3 mil project ... I say Hell No that don't get paid.
didn't meet the customer expectations.
I've been on the other side of this type of deal ... way lower numbers ... but same situation. Customer states budget ... Archy "meets" the top end of the budget ...
I price it out ... and it's no where even close to being buildable for that lowest of low ball estimates. Job never gets done ... but I assume the Archy got paid in full.
Wish my job worked that way.
I know of one case ... probably going to court ... where a kitchen design place did a design for 3 to 4 times the stated budget ... and knew all along what the budget was ... and how much the end result would cost. When the customers feel bad because they can't afford the designers "dream kitchen" ... they feel even worse when they get his bill for several thousand dollars for design time.
I'll be curious to see what the local court says on that one.
My view ... again ... the designer was way outta line. Provided absolutely no service to these people aside from waste their time. Maybe if they went in wanting a fancy picture of a fancy kitchen they could never afford, and offered to pay a coupla thou for a print suitable for framing ... it'd be different.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
In the case originally mentioned, the best solution is for the client to ask the architect to redesign the house to bring it within their budget using the contractor of their choice as a cost consultant and to do the additional design work at a reduced fee rate. To throw away the architect's knowledge of the project and their relationship with him would benefit no one. Going to court would not be beneficial unless they just want to punish the architect at great expense to themselves. This would have to be a very expensive house for the architect's fee to be very much greater than the attorney's fees if it goes to court. BTW, most architect's contracts call for arbitration. Has that already happened? I've designed a lot of houses and will not design to a cost limit; it's just not feasible. I would spend as much time estimating as designing and even if I were willing to do it (and keep up with changing material costs), my fee would increase beyond what anyone would be willing to pay. I always recommend hiring a contractor as a consultant and asking him to provide estimating services as we design and eventually sign a Cost of the Work with a Fixed Fee contract with him. Over the past 2 years I have designed the same house renovation/addition project 5 times. Each time the scope was reduced but the clients then added so much that the cost came in too high. They wouldn't hire a contractor as a consultant. We finally cut out major elements of the program and settled for the least possible footprint, deleted the dormers, the porch and reused all existing windows and siding. It is now almost completed. The client has now added so much to the project that the cost is already greater than that of any of the previous schemes and I am still spending 40 hours a month designing revisions. Try to tell a woman she doesn't need two full laundries in her vacation house or that she can wait until her kids actually get married before renovating the garage loft for the grand children.There should be a warning on all home design magazines, "You probably can't afford this"
In my op the architect based his fee on what he felt would be a projected cost for this home. You need to start somewhere, this was before a pencil made a mark on the plans. Maybe from past projects the projected cost was realistic. As we know demand for services and materials has increased at a rapid pace in some areas.
The intended cost would have been 920k, lowest bid was about 1,080,000 +/- which is not all that far off, the middle bid was about 150k more. This is not an unbuildable plan. For what was intended for the house none of the bids are unreasonable. I have heard the clients had the plans reworked by someone else using some of the original architects original design elements. So the original question is is architect due compensation for his project and ideas?
If the client did not offer the original architect an opportunity to modify the drawings to bring the project cost down, then allowing another to modify the original design and refusing to pay the architect for his work will not be well received by a judge much less a jury. If the final house design looks anything like the architect's design few lawyers would take the case.I'm not a lawyer but I've been on jury duty 9 times and I know juries love to punish those who take advantage of others — perhaps it's because they feel taken advantage of by being singled out for jury duty. I have taken over another designer's project many times but I have always required evidence that the original designer was terminated and paid.Edited 4/7/2006 11:28 am ET by Sweep
Edited 4/7/2006 11:33 am ET by Sweep
If the client did not offer the original architect an opportunity to modify the drawings to bring the project cost down,
From the OP, it seemed as if the client asked for a building at a specific price per sf. That's the work they contracted for, and recieved. If they signed an AIA contract for services, that's it--they have to pay. Any other contract, that might have other provisions.
The sticking point will be in who set and agreed to the price points.
One way of looking at this, is the archy just delivered a set of plans at a 30% discount--that means there's not a lot of budget for "reworks."
Now, normally, if someone wants to make drawings based on a low-ball cost/sf estimate, I'm going to fight that (that's also me, I've been known to insist on T&M for some clients, too).
then allowing another to modify the original design and refusing to pay the architect for his work
That, especially under the stock AIA contract, is some very hot water to go jump into. Changing the professional "of record" gets very dicey, legally. Occupational hazard of my occupation not being around (sorry Bubba)
then allowing another to modify the original design and refusing to pay the architect for his work
In NJ an architect can't even seal another architect's work, worse yet "redo" it.
From the OP, it seemed as if the client asked for a building at a specific price per sf. That's the work they contracted for, and received. If they signed an AIA contract for services, that's it--they have to pay. Any other contract, that might have other provisions.
The agreement i saw was a letter of intent signed by both parties. The architects fee was a % of cost based on what the architect had historicaly experienced in the past for building costs. I think the clients may have assumed from that if they had x square feet it would cost x dollars. If the square footage was increased or lowered it would change by the x dollar amount. Probably did not matter to them if it was cheap or expensive square footage. The clients had the design they were looking for, but not the price they wanted to pay for the building.
"I have heard the clients had the plans reworked by someone else using some of the original architects original design elements. "
Now a days that's a beau coup big copyright violation. Major hefty fines for the owners, the GC, and the new archy.
They better pay up and hope the old archy wants to drop it.
SamT
So the original question is is architect due compensation for his project and ideas?
Yes!
See my earlier post
http://forums.taunton.com/tp-breaktime/messages?msg=72024.27
Edited 4/7/2006 2:08 pm ET by pickings
I was originally thinking that the Archi failed to meet the budget.......and in so doing, compromised the entire project.
However, in a subsequent post you stated...
Actual bids were 15% low bid to 30%high bid over estimate.
This means that the "average" bid was about 22% higher than the budget.
First off, when I worked for archies, way back, 10% over budget was a norm. Given the fact that the archi's portion of the job spanned over a year.....prices change.
Const costs have gone up a lot in the past 2 years. I don't think that the bids are that far from the estimate considering the time frame involved.
IMHO.....they should pay up!
Obviously, architects can't predict construction costs exactly. As you said, things happen that effect material and labor costs. Most of these can be unforseen, like hurricanes for example. This is why it's normal, and acceptable that architects can be plus or minus 10-15 percent..even 20 in rare cases.That being said, I think 22 percent off is a real stretch. In many of the cases I have seen and delt with, 22 percent is almost certainly going to end up with some very heavy duty cost-value engineering, and if there isn't much fat to cut out, probably a redesign.EDIT: Ahh, then I read your post again, and realized I somehow missed your point about an elongated time frame. This makes a big difference. It's kinda like when we give a fee proposal, then 5 years later they come back out of the blue, and are suprised that we can't "go ahead as planned" without revising the numbers a little.
Edited 4/6/2006 11:10 am ET by xosder11
You got it.....time = $$
Start today w/ a $1 mil budget.
Design, re-design, draw, revise, finalize, out for bid..... now 1 to 1.5 years out......
I have had bids vary by as much as 25 % just based on how busy the builders are.
Also......
Contractor A is at 1.15 mil
Contractor B is at 1.3 mil, diff is 150 K or 13%.
How is it that two contractors..... today, using the same plans and specs, building in the same timeframe, can vary by 13%, but an architect, at least a year ago, had to "foretell" the const cost, and is required to be more accurate than either of contractors?
Maybe not an answer to the question.
This problem is one that supports my continual suggestion to architects:
Work, consult with a local builder(s), in your normal design path, especially when there are budget constraints, just as you would an engineer.
From what information I have seen I don't think there was budget constraints. The clients were expecting what they wanted to build would fall into a $200. sf range.
I think that figure was used to establish some kind of benchmark. I saw correspondence indicating they were pleased with the design they had input in creating. They also had an interior designer, not involved with the architect guiding them and incorporating elements in the design.
In my neighborhood I could not build half the house they wanted for what they want to pay. In their location they could build even less, it is an exclusive area in the Berkshires Ma.
If I could afford to build that kind of home, I would have a feel for what I can get for the money I am spending. A fixer-upper farm property in that part of the woods would cost more than what they intended to spend.
I think the architect should get most of the fee, if not all. It's very difficult in today's market to judge pricing. I had that happen on a stormwater project recently, it was a relatively cheap job (less than $60k) and I seriously underestimated the cost to the owner. The bods came in at over twice my estimate, and the only reason the contractors would give was that it was the start of the construction season and that they were already busy.
With a custom home the pricing could be all over that place. You can take 4000 square feet, build a basic box full of Formica, drywall, vinyl floor, cheap carpet and fiberglass tubs, and do it for less than $200,000. You can also turn that 4000 square feet into an elegant showpiece with custom everything, stone, tile, high-end lights and fixtures, exotic woods and custom trim, and easily bust a million, maybe even close in on two million bucks. Plus most homeowners (myself included) do their shopping for fixtures and finishes based on appearance and not initial cost. We search catalogs and go to stores, we find something we want, and then maybe we ask the price. We've gotten a lot of rude surprises that way ("I like that/let's get one/holy $4!t lookit the cost"). Maybe Joe Homeowner didn't bother to ask the cost of the stuff that the architect specified until it was too late.
Finally could not resist reading this thread as on a church addition project 25 years ago the archy quit primarily 'cause of my 'inputs'. We paid him time. Bad news was I ended up doing the design and build all out of own pocket, but tax deductible anyway.
Well though, this thread was a 'wonderful read'. Great reinforcement for total DIY!