How Much Do Architectural Services Cost in 2023?
A big topic, and a very important one if you are considering your own project at home or business.
Prior to appointing any architect or architectural practice, it is fundamental that you have clarity and understanding of how they propose to manage their fees and ultimately your expense (and arguably risk).
How are Architect Fees Calculated?
For years there has been quite a variance and a divide with regard to how these fees are managed, but an architect and architectural team worth their salt should be able to give you a clear proposal leaving no ambiguity or uncertainty.
As a registered member of the Royal Institute of British Architects (RIBA), Base uses the guidelines provided by them to assist with determining what is a reasonable and acceptable approach to fees. These focus on the following:
- A percentage of the construction costs
- A lump sum agreement
- A time charge agreement
Over the years there has been an evolution in terms of how most reputable practices charge for their time. In the past, a percentage of construction costs was a popular choice for determining fees and was almost the industry standard – with any other route standing out for all of the wrong reasons. Nowadays it is far more common to have set parameters that are determined under a time and lump sum agreement. Here is an overview of each of the three routes along with their advantages and disadvantages:
Percentage of Construction Costs
The grandfather of professional fee calculations; the delivery of this agreement will be exactly what it says on the tin.
Historically, architects were not typically given significant detail or aspirations around a project brief, and public and commercial entities simply did not have the vision to understand the art of the possible. The internet did not exist, and power tools such as Instagram and Pinterest were a mere twinkle in the eye of future tech giants.
A client would engage with an architectural practice, with a proposed initial project budget. The architect would then propose a percentage of that budget for their professional time – 10% was (and arguably is still) an acceptable mean average, subject to project constraints.
If the budget were to be revised, then proportionally the architectural fee would also be updated and adjusted.
Advantages: To be frank, we don’t see a huge advantage to any client for incorporating this method of determining fees other than the formula being a simple one! It is archaic and lacks sensitivity to the needs of individual projects and clients.
Disadvantages: Indeed, this approach gives us as at Base a degree of nervousness as a practice. The agreements tend to seem very one-sided, arguably putting the architect in a stronger position than the client.
The construction industry is a forever-evolving environment that is directly impacted by local and national politics, stock markets and seasons. This, therefore, means that any architect with a full and thoroughly acquired set of skills should be adaptable to this changing working environment. If a client were to enter into this type of fee agreement and a significant economic change should subsequently occur, then costs could quite literally double (but perhaps more commonly could increase by circa 25-30%).
This puts the architect in a stronger position than the client and could cause an opportunity for hostility and confusion to develop between the architect and the client. It also means that the financial cost of the design delivery needs to be continually monitored and negotiated, which arguably takes away from the creative experience for all involved.
Lump Sum Agreement
Where a project has a clear vision and scope, it is far easier for an experienced team to assess the project and propose the time associated with the professional time charge.
Ordinarily, by working from an hourly rate, the total time and cost can then be proposed and agreed upon (or rejected) subject to the client’s perceived value of the professional time and input.
It is sensible to ensure that it is understood by both parties how the lump sum agreement would be managed was there movement in the scope of the project from that originally agreed.
Advantages: This gives clarity from the very first engagement between the potential client and architect/practice. There is no room for uncertainty with this type of fee structure, with expectations between both parties being set at the outset. By understanding the formula and costs at the very start, a client also provides themselves with a good indication of what costs could also be associated with any additional work in the future, (if, of course, applicable).
With the use of a lump sum fee methodology, the client also has all the tools they need to be able to calculate their cash flow and expenditure on the project in line with the terms agreed on the appointment.
Disadvantages: From a client perspective, a concern can arise that by working to a fixed fee (and therefore time), an architectural practice’s flare and creativity can be restricted. Ultimately the risk may be that the transaction becomes more commercial rather than advisory in nature, and of course, this is a risk, but it is also completely subject to the practice and individuals you are dealing with.
It is possible to pick up on these vibes when dealing with less-than-satisfactory practices, and in so doing it also enables you to spot those practices that have a culture of going above and beyond for the benefit of the scheme (those that will by nature spend additional time beyond that initially agreed at no additional cost to the client). Again, this is a question that could be asked at the outset, and as a client, you should then digest the response you are given.
Time Charge Agreement
Similar to a Nokia 3210 in the year 2000, this is a ‘pay as you go’ approach!
This approach is based upon either a) a high net worth project whereby the client is looking for the ultimate in flexibility with their design team, or b) a project whereby the strategy and output cannot be defined, for instance where initial viability and feasibility exercises are undertaken to assess a masterplan’s density etc.
These agreements are frequently agreed in slots of time (i.e. 20 hours each week) so that the client has an understanding of the time and fee being accrued, with the next time slot being agreed upon prior to any work being undertaken. In other instances, it can simply be charged as ‘used’.
Advantages: This route gives client and architectural practice a greater degree of flexibility in how to approach a project and its output. It does however rely on a high level of respect and trust, which of course all architects should be working to as part of the RIBA Code of Conduct.
Time charge agreements are simple, allow for quick turnarounds and are charged on an ‘as used’ basis.
Disadvantages: This is a very open-ended approach to fees and time. It relies very much on effective communication between both parties to ensure that there is no hostility or ‘surprises’ with regards to fees generated.
Fees will vary from architect to architect, and practice to practice. Ultimately not all architects will charge for their work in the same way. It is all completely subject to what level of drawing and images the team are using, whether they are a small practice, larger or even an individual.
On this basis, it shouldn’t be possible to advise an industry standard for any architectural work, and those that do are prioritising a financial value over the project itself – something to watch out for. Instead, they should be considered one and the same. Each project is unique and therefore the fee and financial value of each will vary.
Do be mindful of the person and organisation you are engaging with as part of your deliberations in choosing an architect. If you are on a tight budget, and favouring a more budget-friendly fee, bear in mind the architect or practice’s current workload and ask for clarity on expected timescales. You wouldn’t want to appoint an architect or practice which wins large volumes of work on cost, but which in turn isn’t able to keep up with demand and subsequently disappoints.
Do Architect Fee Structures Matter?
Working with an architect /architectural practice should be seen as an investment, especially if you have found one that you instantly gel with. A strong and skilled architectural practice will allow for greater creativity, flexibility and enjoyment throughout the process of designing your project, as well as being able to call on their experience to potentially save money and expense when considering build costs and design details.
Prior to making a final decision, it is key to ensure that when engaging with an architect you have a clear understanding of how they approach their fees and how they handle any variations or changes throughout the design stages.
At Base, our approach to fees is exceptionally bespoke and specific to each and every individual scheme. We use a combination of both the lump sum agreement and time charge route depending on the client and project.
We find that this unique approach gives our clients confidence in what we are advising, engaging on and producing, whilst also managing expenditure and risk to each client. Communication is paramount and under no circumstances is time charged without prior discussion and approval.
If you are interested in discussing your project with Base, be it architectural design, planning and applications, Architectural feasibility studies or any other architectural services please do not hesitate to get in touch by reaching us through our Contact form, email: [email protected] or by phone: 01743 236400.
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