Architecture - Contracts

Author

Contracts

Warm Worm

2007-02-14, 3:25 am

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?

Ken S. Tucker

2007-02-14, 3:25 am

On Feb 13, 11:12 pm, "Warm Worm" <glome...@yahoo.ca> wrote:
> 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?

Good Question WW.
For any serious contract you must first
get an RFQ, (Request for Quotation), it's
up to the sales people to help the customer
formulate the RFQ so the specifications
are quoteable. That's because the quotation
following the RFQ is the basis for a legally
binding contract. IOW's once the quotation
is submitted, the costumer - within the time
specified in the quotation - can confirm the
contract, and thus you're legally required to
fulfill the quotation terms.
So get a good RFQ, and things go smooth.
Ken

Michael Bulatovich

2007-02-14, 9:25 am

Michael Bulatovich

2007-02-14, 9:25 am

"Michael Bulatovich" <Please@dont.try> wrote in message
news:eqv18f01o7l@news4.newsguy.com...
>
> "Warm Worm" <glomerol@yahoo.ca> wrote in message
> news:1171437148.758637.256320@k78g2000cwa.googlegroups.com...
>
> Definitely, varies, and to weed out the crooks and the cooks.

I meant KOOKS. Cooks are prone to spending time and money designing
kitchens....I like that.

Bob Morrison

2007-02-14, 1:25 pm

In a previous post Warm Worm wrote...
> 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.

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

> Are there certain standards, and/or do you tweak them or customize
> your own?
> What are they or might they be?

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.

> What about billing? Flat fee for job, or per hour? Percentage?

Usually Standard Hourly Rates with a Minimum and a Maximum
> Retainers? How much? Why/why not?

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

> What about time/cost overruns? How do clients respond to them? How do
> you to their responses?

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.

> Anything else to add? Websites (architecture/design-specific?) to
> recommend on the subject?

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
Structural & Civil Engineering
Poulsbo WA
bob at rlmorrisonengr dot com

Pierre Levesque

2007-02-14, 1:25 pm

"Warm Worm" <glomerol@yahoo.ca> wrote in message
news:1171437148.758637.256320@k78g2000cwa.googlegroups.com...
> 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?
>

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.

Pat

2007-02-14, 1:25 pm

On Feb 14, 11:40 am, "Pierre Levesque"
<pierrelevesqueNOS...@connarch.com> wrote:
> "Warm Worm" <glome...@yahoo.ca> wrote in message
>
> news:1171437148.758637.256320@k78g2000cwa.googlegroups.com...
>
>
> 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)

What do you do if the construction cost comes in LOWER than budgeted?
hahahahahahahahahahaha!!!!!!

>
> 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.

Pierre makes many good points.

I have a different twist on it from the other side of the desk. To
start with, most architects I've come across don't negotiate "the
contract" as much as they negotiate "the fee" since they all use the
standards AIA form. It's a great contract for architects because it
really covers their arses. It says if the building doesn't meet code,
that your fault; not the architect's. If the building falls down,
it's your fault. If you can't get a building permit because of bad
design, that's your fault. It basically leaves you wondering why
you're hiring an architect in the first place.

Oh, and if they miss something or make an error that they need to
correct, you need to pay them to fix their mistakes plus it generally
means you have to pay the contractor more, too. It's a great gig if
you can get it.

Pierre Levesque

2007-02-14, 1:25 pm

"Pat" <groups@artisticphotography.us> wrote in message
news:1171474235.890777.50760@h3g2000cwc.googlegroups.com...
> On Feb 14, 11:40 am, "Pierre Levesque"

> What do you do if the construction cost comes in LOWER than budgeted?
> hahahahahahahahahahaha!!!!!!
>
Believe it or not, I lower the fee. That said, it happened once in the past
5 years!

The reason I negotiate the contract is because the fee is part of the
contract whereas the same doesn't apply the other way around. Well informed
clients have peace of mind and know exactly what service they will receive.

I have one client who has a base budget for between 750K to 1mil. He
claimed that he had a limited amount of $$$ to pay for design fees until he
could get his construction loan. So he really wanted to be specific. He
had questions about the amount of hours I budgeted on the design and I
needed to appease those concerns. In the end, I had to convince him that
the amount of budgeted hours were just an estimate so that he could
understand the amount of work involved. He wanted me to remove the amount
of hours from the contract so that I couldn't "hold him" to the hours.
Anyhow, I had no problem with that since I only used them as a guide to
calculate the fees but he also had some excellent other questions about
"Additional Services"

Check out these informed questions he had for me after being well informed
on the process. He and his wife read and understood the proposal enough to
ask very good questions. Within the body I include my answers:

(BEGIN)
At first glance, I noticed that the comments are being made in reference to
the first document I sent in error and advised for it to be
disregarded/discarded. Please use the second document I sent.
Once you do that you'll notice that you are absolutely right in all the
points you mention applicable to the rider and supplemental fee table. The
second document I sent precisely reflects the exact numbers you refer to. It
contains a base fee of 40K up to 750K construction cost, 50K up to 1mil, and
60K maximum fee if the construction cost goes above 1 mil. I doubt it will
go over a mil but no matter, I'm willing to cap the fee at that point.

In other words, that's a little bit over a 5.3% fee for a construction cost
up to 750K, a 5% fee up to 1mil, and a maximum cap of 60K even if the job
goes over 1mil.

That's a fee that is far below the usual industry standard fee of 8 to 10%
for full architectural services including custom design of almost every
single aspect and component for the design of this project.

Another aspect that can be clarified immediately is the issue of "rigid
hours". There are no rigid hours. If it actually takes me a hundreds of
hours more to complete this project so be it. The hours mentioned in the
agreement are merely listed to give you an understanding of how many hours I
budgeted to come up with the fee structure I proposed. The simple reality is
that full architectural services for custom high-end residential design is
commonly calculated at about 100 hours per 100K of construction cost. In
other words, if the construction project cost ends up being 1mil it is very
likely that I will actually spend 1000 hours or more on the project. But I
am willing to accept the lower percentage and cap fee. If you are concerned
about my keeping track of hours and coming to you demanding more $$$ when I
surpass the estimated time, you shouldn't be. That is not why they are
listed. I can remove any reference to hours if it makes you more
comfortable.

About the AIA contract, these are standard form contracts that are time
tested and designed to protect both parties but I will explain each point to
appease your concerns

> Article 2 Section 2.6.8: We do not agree with this section because we
> would like to be able to communicate with the contractor as needed.

There is no question that you can, should and likely will be in direct
contact with the contractor as you will be on the job site far more than I
will. That paragraph applies to formal written communications. I'm certain
that you will have constant discussions about construction techniques, ideas
for changes etc. However, this section exists so as to avoid contrcaxt
administration issues on work change directives, work change orders,
contractor payment requisitions and issues that directly involve design,
detailing, construction detailing and most importantly construction cost
changes.

For example, suppose that you notice that there are predominant breezes that
come down your driveway from the west. It is a very nice breeze in the
summer and a biting cold wind in the winter. You have a discussion with the
contractor about how it would be nice to add more windows on that side of
the house and that the addition be flexible enough to be closed off during
the winter. There is nothing wrong with having the discussion amongst
yourselves but it is my responsibility to come up with a design that
complements the overall design that addresses the needs, to detail it
properly so that it is built properly and most importantly, that I submit
the design change to the contractor for an estimate. I then submit that
estimate to you to assure that we are all on the same page and record the
construction cost change in the contract before it being built. Once
approved, I can prepare a change order which in turn changes the overall
contract amount. In other words, this is directly related to contract
administration and the architect is and should be the liason for any and all
issues and discussions that can affect the construction cost and contract.

> Article 3 Section 3.2.1: Can you explain what another project
> representative might be? If another representative is needed, we would
> like to be consulted.

A project representative is a consulting individual like a construction
manager who is not specifically an employee of the architect. In residential
projects like yours, for example, suppose that the contractor continuously
does sub-standard work or doesn't fully comply with construction consistent
with the detailing or constantly fails to follow a construction schedule or
for whatever reason it is determined that you might need constant project
management or site supervision to "guard against deficiencies and defects in
the work" (as described in 2.6.5) which would require the architect's
presence beyond "exhaustive and continuous on-site supervision" (as
described in 2.6.5). There is no question that this would exhibit itself
over time and we would surely have several discussions before deciding to
engage a consultant. Any and all consultants brought in need to provide
estimates and be approved by you before being engaged.

> Section 3.3.8: What does this mean?

It relates to public hearings for variances, easements, special permits etc
and other work beyond the normal scope of services.

> Section 3.4.3: We thought this is what you needed to do to start the
> project.

This is a non-issue. You already own the property. This applies to finding
prospective construction sites meaning prospective properties. It does not
apply to finding a building site on your property.

Suppose we work together on another project in say, 5 years. You retain me
to design that building but there is no site yet. Before providing
architectural services to design a new building a new property and site
needs to be found by performing "planning surveys, site evaluations, and/or
comparative studies of prospective sites". We would arrange a separate
agreement for those services or at least include compensation for that
component in the service agreement.

> Section 3.4.8: What does this mean? We thought that this is what you do
> during contract administration.

Applies to "supplied by owner" or "supplied and installed by owner" items.
That doesn't mean that you are actually doing portions of the work but it
does mean that you might be contracting directly with some trades outside
the construction contract. In other words, suppose the construction contract
is 500K. I am responsible for preparing and administering that contract. But
suppose you have your own people do the gravel and ditch work for your
driveway and you contract with them directly for 15K. I am not responsible
for the administration of that agreement unless you employ the architect to
do so. He/she would and should be entitled to additional compensation for
that.

> Article 7: As we spoke, we do not want this.

Nobody wants that. This section deals with issues I have thankfully never
had to deal with... I intend to keep it that way! This gets into the "ugly"
part of the contract.

I can take that paragraph out if you wish but it is there to protect both
parties so as to avoid expensive and potentially prohibitive legal costs if
a dispute couldn't be resolved. Even so, there is an "out" in paragraph 7.1
"...American Arbitration Association currently in effect unless the parties
mutually agree otherwise". Should there be a dispute, we could mutually
agree to not go the arbitration route and opt for traditional legal counsel.

> Article 8: Section 8.2: Does "suspended" mean that we request all work by
> you to be completely stopped? If so, we would agree with this and this
> section is acceptable.

Once again I have happily never had to submit to this section and don't ever
plan to.

It means that if the owner formally suspends the work in writing (as per
owner's responsibilities) the architect is due compensation for work
completed up to the suspension date. Suppose that for whatever reason it
becomes apparent that you won't be able to continue the project due to
financial reasons or any other reason. The architect can't continue to work
and expect to be be compensated after you suspend the work. The purpose of
this is to provide a mechanism that draws a line somewhere that establishes
at what point compensation is covered and due. If the project then resumes
at a later date, the architect is entitled to compensation for expenses
incurred due to the interruption and for re-scheduling the project at the
resumption of the project.

> Article 8: Section 8.7: We do not understand .1,.2 and .3. We would like
> this to be changed to something more simple. For instance, We would like
> it to read that if we were to terminate the contract, we would be
> obligated to pay for services rendered to date and for the full completion
> of the current active contract stage.

Are you certain you want to go that way? This is a tried and tested way that
establishes a system of settlement. To put it in perspective consider the
two options:

Option 1 (current):

Suppose either of us terminate the contract for whatever reasons as per the
current agreement. The current option is a very simple formula. If the
contract is terminated by either of us anytime up to and during the
Schematic Design Phase, the compensation would be 20% of the total fee at
the point of termination of 40K = 8K (if no additional services were
incurred). During the Design Development Phase, 10% of the total fee of 40K
= 4K (if no additional services were incurred). During the Contract
Documents Phase and beyond, 5% of 40K = 2K (if no additional services were
incurred).

Option 2 (your proposal):

Suppose either of us terminate the contract for whatever reasons as per your
suggestion. If the contract is terminated by either of us anytime up to and
during any of the phases according to the fee schedule/table, the payment
due would be "services rendered to date and for the full completion of the
current active contract stage". If that were to occur during the Contract
Documents Phase the settlement would be 16k! If it were to occur during the
Contract Administration phase it could be even more if the construction
contract graduates to the next levels. You don't want to take that risk do
you?

The purpose of this section is to basically enable a contract buyout that is
fair to both parties. The retainer insures that funds would be available for
a settlement. If this section were to be imposed the retainer would be
debited or credited to the buyout.

> Article 9: Section 9.1: This needs to be changed to, "governed by the law
> of the residence of the owner". This is where the house will be!

These AIA contract forms are based on solid legal precedence and are time
tested and designed to protect both parties. I suspect it legally has to do
with the fact that the architect is providing you with a service. Therefore
it is a service agreement not a construction contract. Clearly the majority
of the services are being performed and provided from the architect's place
of business not from where the project is being built.

Concurrently, the construction contract with the contractor will be governed
by the laws of the principal place of business of the contractor just as the
warrantees of the materials will be governed by the laws of the principal
place of business of the manufacturers etc etc etc

You and your property will be protected by the insurance the contractor will
be required to have including liability, workmen's compensation and
disability insurance naming you and the town of Hunter as covered.

> Article 10: Section 10.2.1.1:Except for the statement regarding authorized
> out of town expenses, all else should be included in the fee.

Travel to and from the site is included in the fee because as it is a known
expense. I know my costs to travel upstate and I have a place to go to
anyhow so it isn't cost prohibitive. Long-Distance communications are also
included because these are so minimal that it would cost more in time to
figure out the costs. However, if Sarah, you and I needed to take a trip to
some stone quarry in Vermont to pick out some stone or something similar,
that would be an authorized out-of-town travel expense.

I can't include fees paid for securing approvals and building permits etc
from authorities or expeditors etc because they are unknown costs and
usually have to be paid directly by the owner anyhow or the architect has to
advance the payment and therefore should be entitled to reimbursement plus
multiplier to cover the overhead and time it takes to perform these.

> Article 10: Section 10.2.1.2: This would seem to us to be included in the
> contract.

I can't include this as I can't predict how many changes will be made and
how many sets of prints will be made for revisions, how many sets of prints
will be distributed to contractors and sub-contractors for estimating and
bidding etc I can't predict what costs the printer will charge for
blueprints etc. The same issue applies to mailing, shipping, messengers and
so on.

Receipts will always be presented with the invoices if requested.

Clearly, I will not charge for anything printed in-house for obvious
reasons. Also, keep in mind that a lot of printing will be eliminated
because of emailing and scanning, posting to my website, attaching documents
etc

> Article 10: Section 10.2.1.3: This doesn't seem probable?

This doesn't apply. There is no hourly work being done thus overtime
compensation will not occur.

> Article 10: Section 10.2.1.4: Isn't this something that you do
> fundamentally?

Fundamentally yes to an extent. Surely study models, study sketches, things
needed to develop the design and make the design clear for your approval is
fundamental standard work.

But high-end highly detailed work or 3D CAD renderings etc done by outside
consultants for presentation purposes to zoning boards or investors or for
real estate listings or for show or publication are not considered
fundamental standard work. As usual, all consultant work is to be approved
by you prior to being employed.

> Article 10: Section 10.2.1.6: Isn't this something that is done to produce
> our plans?

Too funny... Four words: DOCUMENT B141 - 1987 EDITION... The prehistoric
days of construction documentation.

> Article 11: We will agree to a prepayment of $2800 which will cover

> the Documentation and Programming Phase. We will then pay for all

> subsequent phases upon their completion. Section 11.1 should therefore

> read "an initial payment of $2800 (two thousand and eight hundred

> dollars) shall be made upon execution of this contract and be used as

> a prepayment for phases 1 and 2(Documentation and Programming).

> Section 11.2.1: See rider. (see changes to rider)

I work on a 10% retainer basis as described and repeated in various sections
of this clarification document. The retainer is credited to the final
invoice but mostly it provides for and warrants that the agreement will be
executed as written unless applying the termination, suspension or
abandonment clauses as described in Article 8.

> The following are a few remaining concerns we have with the rider:

> Page 10 part c first bullet #3. We are unaware that there is a strict time
> frame. Perhaps we need to clarify this.

It's related to the point prior to that. Suppose a design is presented for
approval to you and several weeks or months go by without an approval
response or decision to move forward. In the meantime, suppose zoning
changes take place which result in the entire building needing to be reduced
in size or needing to be setback farther or needing to be lowered due to new
height limitations or some other change affects the design due to these new
laws. In other words, a design change would be needed caused by something
outside the architect's power, clearly the architect should be eligible for
compensation to make these changes.

> Page 10 part c second bullet numbers 1-4. Confusing. Please clarify.

1. Suppose you bring in other design consultants like or space planners or
landscape designers to help out with the design program... Working with
outside consultants you bring in isn't part of the agreement. Since this is
an unknown and since it is impossible to predict a fee based on how much
work might be entailed to coordinate and work with outside consultants the
architect should be eligible for compensation.

2, 3, 4. Suppose the Programming and Schematic Design Phases are complete
and approved. All the sketching is done, the basic house is conceptualized
and sketched and approved. The plans are essentially developed freehand and
approved. I've begun the Design Development Phase by drafting the plans,
elevations, sections, for final presentation prior to turning them into
construction plans and the design program dramatically changes which in
turns renders all the work done to date useless. That would cause a complete
re-visit of the design thus requiring a re-design, new schematics, new
design development etc etc etc

> Page 10 part c fifth bullet. What does this mean?

Suppose that the Town of Hunter suddenly decides that a special use permit
and environmental impact is required... That they have a "special design"
board exists and needs to have a presentation made to the town board... That
they suddenly require an energy conservation analysis...

> Page 11 part c eight bullet. What does master plan mean?

A Master Plan design would be an overall design for the entire property
including extensive landscaping, roads and trails, paths, accessory and
secondary buildings, or anything not directly related to the house like
patios and decks, driveways, garages and anything within direct proximity to
the house. That said, I'm not about to nitpicks for every little rock in the
backyard being moved. The general scope includes resolving a design concept
that is achieved by studying and analysing the layout of the land,
predominant views, climatic conditions concurrent with your programmatic
requirements and so on.

> Page 11 part c ninth bullet. Isn't this part of it? What does this mean.

Presentation models and renderings are high-end presentations for outside
agencies like planning boards etc. See Article 10: Section 10.2.1.4: above

> Page 11 part c thirteenth bullet. ?

Example: You get a bunch of product specification sheets from dozens of
manufacturer's, or you get dozens of different schemes from a kitchen
consultant that you hired yourself, or you hire your own consultant to do
electrical/lighting plans but you employ me to coordinate, supply support
documentation to enable this or review all the material...anything you do
outside of my direct design involvement or beyond normal procedures. Another
issue I've never come across. This would only apply if it became exhaustive
and continuous. Clearly I will be coordinating every aspect of the project
but this just assures that it isn't a bottomless pit...

> Page 11 part c fourteenth bullet. ?

Same general point as above

> Finally, on page twelve, please change the retainer to $2800.00 and have
> it state that this is a prepayment for the first two phases.

Then it's not a retainer is it? I'm very uncomfortable with that. I get no
financial protection for ongoing work. Suppose I've invoiced and been made
whole up to the Contract Documents phase. Then you decide that you want to
go in another direction or you need to suspend or abandon the project for
whatever reason. Meanwhile I'm well into producing the Construction
Documents when you make the decision. What guarantee do I have that I will
be compensated for the work done at that stage? The retainer gets applied to
the termination, suspension or abandonment as described in Article 8

The retainer is a commitment that assures that everyone abides by the
contract for the life of the contract and that is credited at the end of the
agreement. It is just like any 10% holdback on services provided by any
professional or like an insurance bond or a security deposit on a rental
space.

> Pierre, We are sorry about the over attention to detail, but we have found
> that if there is complete clarity and understanding in a contract, both
> parties are much more happy as a result. When you make the changes and
> clarifications, we will send the prepayment in order to start the process.
> Rob will be out of town from Thursday to Tuesday. If you can make the
> necessary changes and clarifications prior to Thursday, we can sign the
> contract and send the check. Otherwise, we can complete this process the
> following week.

Don't get me wrong about my appearance of "no flexibility" on the fees and
costs. I admire your diligence to detail and appreciate that you are willing
to build a high end residence in that part of the mountains. But the simple
fact is that I'm taking a great chance by devoting full services to this
project for the fee I'm committing to. This project will take up the
majority of my time for the year and it will cost me dearly financially to
pull off in exchange for what I hope is a project that we will all be proud
to have completed. Let there be no doubt, in addition to respecting and
being fond of you I see this project as a rare opportunity to design a
higher end residence in the Catskills and I intend for it to be the first of
many as I establish a presence in the area. I am essentially trading the low
fee for promotional costs I would otherwise need to incur to try to attain
recognition in the region.

I hope you too can appreciate the risk I'm taking.

Pierre

--

Pierre Levesque, AIA

c. 917.577-8780

Don

2007-02-19, 5:25 pm

"Warm Worm"> wrote
> 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?

Like Michael, all of my work is from word of mouth, so the client already
knows what he's in for.
I work on a *square footage* basis.
(how many *hours* I work on stuff is my business and no one elses, thank you
veddy much)
That is, for every 1 square foot of 1 story house I draw Permit Drawings for
I charge $1.00.
A typical house is about 4000 sf so I charge $4000.

But there are other step(s) before we get to that part.
The Preliminary Design is usually the first step and again, I charge by the
sf, and for a 1 story house its $.50/sf.
Sometimes I lose money (or time) at this stage because creativity cannot be
harnessed.
The trick is to be able to *read* the client and the job BEFORE quoting the
design price.
If either the client or the job appear to be nefarious I will charge MORE
than the $.50/sf.

The thing is, when a client has already been referred to me, not once has
one not accepted my prices no matter how high I make them.
(I had a client last year that wanted a 10,000 sf house and I quoted him a
price of $3.00/sf just for the designwork...and he eagerly paid it.)

Getting back to the contract stuff.
All of my jobs are simple and thus my contract is my invoice template.
The only thing that changes on it is the numbers.
And yes, I always charge a deposit, usually at least $500.

Collecting the deposit can seem awkward when you first start doing it cause
you're not used to doing it and you don't have confidence in yourself and
your work.
After a few hundred clients you'll get used to it.
The truth is, *professional* clients respect you more when you collect a
deposit
I mean, where else are they gonna spend $4k for something and NOT pay for it
in part or whole?
(I don't accept credit cards of course)
If you DON'T collect a deposit the client won't respect you and he will take
advantage of you, he has you by the ballz.
If you have his money you have HIM by the ballz.

In my presentation, where I first meet the client and discuss his goals,
etc., and I describe how the *process* of getting a building permit, a loan,
and the working with contractors, work, as well as how I do the designwork,
included with this spiel is the mention of how the money will happen, the
per s/f rate, the payment plan, etc.
That way I don't have to confront the client all in one fell swoop with the
deposit thing.

In other works, I stir the whole pot while delivering the gravy.

Revisions. <sigh>
Let me start off like this:
I HATE THE MOTHERFUCKERS!!!!!!!!!!!!!!
(Hold your hand up if you remember working late into the night, erasing the
backs of sepia drawings til your electric eraser was about 1000 degrees, and
then drawing the revisions on the front side, and then going home with
eraser dust in your eyebrows at midnight.)
Over the years I have spent more hate on revisions than you can imagine.
They are unfortunately, inevitable.
But during the bazillions of hours I hovered over drawing boards and
keyboards I have thought about these things and what part I play in them and
how to make my business work to my advantage and reduce the amount of time I
spend on revisions.
Suffice to say that over the years I have created a presentation that is so
strong and assertive, and I maintain that attitude throughout the process,
that I have reduced the incidence of revisions to a bare minimum.
After all that clients are terrified to approach me with changes.
The brave ones that manage to ask me about them have already prepared
themselves psychologically for the enormous cost of doing so, cause I had
already warned them about the costs of revisions in my presentation.

Builders are the worst clients when it comes to revisions.

The thing I hate most about revisions is that at their base they are
criticism of my work.
My work wasn't good enough, so change it.
And change it again, til it is good enough.

Off the street clients aren't as demanding and are easily schooled into why
I do what I do.
Builders however are led by something else, something evil, profit.
If a builder can trim 50 cents off the cost of a house and make you work 2
more hours in the process then he'll certainly do it.
I only work with 1 builder anymore and he has been my client for almost 18
years now.
I have groomed him well and he is little problem to me.
Having said that, I have jumped through all kinds of hoops for him over the
years, because he is a good client and refers lots of private owners to me.
I estimate he has channeled more than $500mil worth of built structures to
me since I met him.
I'd even get on a plane (gasp!) and fly to FL to meet with him in a seconds
notice, though I'd try my damndest to talk him out of it. LOL

Don't know if this answered any of your questions with this rambling but
there it is none the less.

I sense I bit of hesitation and concern in your posts on this subject and
this is expected.
You are launching into the largely unknown.
Starting a business is naturally that way.
You will never know everything about running a business and no 2 clients are
ever the same.
But if you are brave enough to start the business then I encourage you to
summons that same courage every single day and never give up.
NEVER give up, EVER!
In fact, I FORBID you to ever give up.
If you give up I will hunt you down and kick your XXX like a lowly employee!
LOL
Keep all of your senses tuned, research your work, be diligent, treat your
clients BETTER than you'd expect to be treated (its easier to KEEP a client
than it is to GET a client) and always examine YOUR role in any given
endeavor.
You can't change others, but you can change you, and thats where your focus
should lie.
Best.
Onward.......

Don

2007-02-19, 5:25 pm

"Pierre Levesque"> wrote
> 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

OK, what exactly IS all that stuff?
I know we both do similar things and we each call them different things
but......
Documentation?
Programming?
Schematic Design?
Contract Documents must be what I call Permit Drawings.
Bid Package?
Required Approvals?
Contract Administration?

Sheesh, all that stuff sounds downright scary!
No wonder architects get a bad rap. LOL
You guys need to *friendly-up* your stuff so you don't seem so
intimidating.........

Michael Bulatovich

2007-02-19, 5:25 pm

"Don" <one-if-by-land@concord.com> wrote in message
news:12tk5v97finml67@news.supernews.com...
> Sheesh, all that stuff sounds downright scary!
> No wonder architects get a bad rap. LOL
> You guys need to *friendly-up* your stuff so you don't seem so
> intimidating.........

You don't know how true that is.

Pierre Levesque

2007-02-19, 8:25 pm

"Don" <one-if-by-land@concord.com> wrote in message
news:12tk5v97finml67@news.supernews.com...
> "Pierre Levesque"> wrote
>
>
> OK, what exactly IS all that stuff?
> I know we both do similar things and we each call them different things
> but......
> Documentation?
> Programming?
> Schematic Design?
> Contract Documents must be what I call Permit Drawings.
> Bid Package?
> Required Approvals?
> Contract Administration?
>
> Sheesh, all that stuff sounds downright scary!
> No wonder architects get a bad rap. LOL
> You guys need to *friendly-up* your stuff so you don't seem so
> intimidating.........
Funny... all my clients insist on the contract being as granular as
possible so that they know EXACTLY what they're getting and paying for. BTW
the CD's are all the documents that will form the agreement between them and
the selected GC. That's the specification, the construction plans, the bid
package, the filing set and the written contract itself. So I guess that
makes it all the MORE scary huh? ;-)

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