Contracts

These questions are in another of my posts, but I thought the subject to be important enough to merit its own thread. That said, it would be nice if some of you would like to share how you approach, negotiate and navigate a contract, both at the beginning and over its life. Are there certain standards, and/or do you tweak them or customize your own? What are they or might they be? What about billing? Flat fee for job, or per hour? Percentage? Retainers? How much? Why/why not? What about time/cost overruns? How do clients respond to them? How do you to their responses? Anything else to add? Websites (architecture/design-specific?) to recommend on the subject?
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That's like asking, "How do you behave?"

Sort of... but so many modifiers. This is the real, fluid, plastic, dynamic world we're talking about. Does knowing about the hydrological cycle tell you if it's going to rain today?

Sometimes, sometimes, and sometimes.

Definitely, varies, and to weed out the crooks and the cooks. They'll never pay one.

Depends on the contract. They're never a problem when they are responsible for them, unless they blame you anyway.

My practice was set in motion by referrals from consultants I had worked with in the past and who knew what I could do. After that, it was word of mouth from clients, new consultants and new builders. I sat around for 6 months setting up systems that served me well once the work started to come in. Always do your best *for the client*. Architecture is service, unless you're Louis Kahn... he he
--


MichaelB
www.michaelbulatovich.ca
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I meant KOOKS. Cooks are prone to spending time and money designing kitchens....I like that.
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In a previous post Warm Worm wrote...

I have several types of contracts that chosen to fit the scale of the project. Large project = large contract, simple project = simple contract.

My contracts are based on AIA, EJDC and CASE standard contracts with some provisions added for Washington State law and some recommendations from my attorney.

Usually Standard Hourly Rates with a Minimum and a Maximum

Most of the time. Depends on if they are a regular client.

If there has been no major change in the scope of work then you are most likely stuck holding the bag for any time/cost overruns. Obviously, one should try to avoid these <grin>. My worst one one was a project dealing with Stormwater Permits in King County WA. I ended up "donating" about 200 hours to the project, which was for low income housing being built by the Lutheran Church.

None come to mind immediately, but you might want to buy a copy of AIA Standard Agreements and then modify them for you own use.
--
Bob Morrison, PE, SE
R L Morrison Engineering Co
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I generally use modified versions of the 'B151-Standard Form of Agreement Between Owner and Architect-Limited Scope' for small projects and 'B141-Standard Form of Agreement Between Owner and Architect' for larger projects.
The base forms covers the scope of basic services, definition of additional services, owner and architect responsibilities, termination conditions, and all the other legal aspects etc. The modified part is in the form of a rider that I add which covers all the work description, fee structure, payment schedules.
I do this because the form agreement is very much written in legalese and owners can't or don't want to understand it. It reads as jumble to most clients. So the rider is written in more of an understandable step-by-step description of the process. Those steps become the phases that define the payment schedule.
In the contract form, the entire compensation section defers to "see rider" "as described in rider" etc
When I have my initial meeting with the prospective client, I describe what "full services" entails by defining the process in a step-by-step way. I discuss the value added, emotional and financial benefits of full services to dispell the common concept that "architects just draw plans" and give structured reason as to why and how services add up to +/-10% of the construction cost. When I send them the service proposal, the contract form and rider is basically an exact repetition of the initial meeting we had so that the proposal appears familiar.
Fully knowing that the majority of small architects and architecture firms use their own 4-5 page written agreements that doesn't "cover all the bases" in describing the full scope of services, I urge them to get bids from other architects and compare those bids to the full service I offer. In other words, I clearly give the impression that they will get 'more from their money' or at least 'know exactly what they'll be getting' from my firm, I hope to gain advantage in the bidding process by becoming the prospective's educator in the process. From there, it's just a matter of negotiation compensation. Most often the fee structure is based on a fixed percentage of the estimated construction budget, usually between 8 and 10%. More for smaller projects, less for larger projects.
The estimated construction budget allows me to establish a payment schedule broken up into variations of the standard phases of the design and construction process. Here's a simplified example for a $200K job using $100.00/hr as the basis for coming up with the fee (for ease of example):
(BEGIN) JOB PHASE ESTIMATED TIME % FEE
1. Documentation 4hrs 2% $400.00 2. Programming 10hrs 5% $1000.00 3. Schematic Design 20hrs 10% $2000.00 4. Design Development 30hrs 15% $3000.00 5. Contract Documents 80hrs 40% $8000.00 6. Bid Package 10hrs 5% $1000.00 7. Required Approvals 6hrs 3% $600.00 8. Contract Administration 40hrs 20% $4000.00
TOTAL PROJECTED FEE 200hrs 100% $20000.00 (END)
Of course, as the design process progresses, the design will dictate if the actual construction contract will be higher of lower than the budgeted number. To assure that the owners haven't just tossed out a low number to lower the design fees, I structure a specific payment phase adjustement in the Contract Administration phase that matches the agreed upon percentage (in this example 10% of the construction contract amount). My rider includes the wording:
(BEGIN) Each phase serves as the basis for intermittent invoicing periods. Invoices will be presented indicating completion percentage (%) of each phase. The Total Fixed Fee is based on an hourly fee of $100.00/hr and is a result of the amount of services for which the Architect is retained. The amount of time for each phase is only an estimate of minimal amount of time required for providing construction documents to any contractor and obtaining approvals. It does not guarantee all the documentation that any given contractor may require to build the project. This may affect the projected construction cost as a contractor may increase the estimate so as to cover costs for complete construction documents and detailing. The actual construction cost of a project cannot be fully determined until a complete construction set and scope of work is prepared but as discussed, the amount of construction is based on prioritizing the work within the given budget. The fee remains fixed until the actual construction contract amount is determined after a general contractor is chosen. When this occurs, the fee will be adjusted to match the agreed upon % of construction mentioned previously and will be adjusted in as part of the contract administration phase of the agreement. (END)
In other words, if the actual construction contract comes in at $250,000.00 the fee gets adjusted to $25,000.00 (up from 20K) and the 5K gets added to the Contract Administration phase (in the example, the CA phase would go from 4K to 9K)
Then I get very specific about 'Project representation beyond basic services and additional services of the Architect not included in this agreement'. The base contract covers this in some detail but the rider gets very specific as to what the exclusions are.
The rest is standard contract stuff like additional provisions, retainer amounts, reimbursable expenses, other conditions or services etc
Both the base form and rider make up the contract and both are signed.
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