Compensating Your Architect


Appropriate professional compensation is important to meeting your goals; cost and value go hand in hand.

Experienced clients recognize that adequate compensation for the architect is in their best interest as it assures the type and level of services needed to fulfill their expectations. You may have questions about how to arrive at the appropriate compensation for your project. Some of the more frequent questions are answered here.

How much should I expect to pay an architect?
That will depend on the types and levels of professional services provided. More extensive services or a more complex or experimental project will require more effort by the architect and add more value to the project. You should budget accordingly for architectural services. And what methods of compensation are available?

These are the most common:

· A stipulated sum based on the architect's compensation proposal
· A stipulated sum per unit, based on what is to be built (for example, the number of square feet, apartments, or rooms)
· A percentage of the construction cost
· Time and Expense based on per Hourly cost
· A combination of the above

It is worthwhile to note that AIA Document B163 provides six separate methods of compensation that can be tailored to the types of services being provided.

My project is one characterized by repetitive units (bedrooms, apartments). Does it make sense to use these units as a basis for compensation?
Sometimes – for example, when the probable number of units (or, alternatively, the highest and lowest probable numbers) is known.

Percentage of construction cost has been a simple and popular method of compensation. Is it recommended?
Again, it depends. While the percentage method is simple in concept, it requires a rigorous determination of what the construction cost includes. The result may be too high or too low, given the complexity of the project and the professional services required. Finally, this method may penalize the architect for investing extra effort to reduce construction cost on behalf of the owner.

What does a stipulated sum include?
This is a matter of negotiation with your architect, but generally it includes the architect's direct personnel expenses (salary and benefits), other direct expenses chargeable to the project (such as consultant services), indirect expense or overhead (costs of doing business not directly chargeable to specific projects), and profit. The stipulated sum does not include reimbursable expenses.

When does it make sense to consider hourly billing methods?
Again, this is a matter of negotiation, but it makes good sense when there are many unknowns. Many projects begin with hourly billing and continue until the scope of services is defined and establishing a stipulated sum is possible. It may also make sense to use this approach for construction contract administration and special services, such as energy and economic analyses.

What are reimbursable expenses?
These are out-of-pocket expenses incurred by the architect on behalf of the project that usually cannot be predicted at the outset, such as long-distance travel and communications, reproduction of contract documents, and authorized overtime premiums. Detailed in the owner-architect agreement, they are usually outside the stipulated sum or hourly billing rate and normally billed as they occur.

What about payment schedules?
Once the method and amount of compensation have been established, ask the architect to provide a proposed schedule of payments. Such a schedule will help you plan for the financial requirements of the project.

What other expenses can the owner expect?
The owner-architect agreement outlines a number of owner responsibilities, some of which will require financial outlay. These include site surveys and legal descriptions, soil-engineering services (for example, test borings or pits), required technical tests during construction (for example, concrete strength tests), an on-site project representative, and the necessary legal, auditing, and insurance counseling services needed to fulfill the owner's responsibilities.