Should all professionals' fees as a percentage be banned?

[kkelliher]

Go into Edit/Advanced and look for the thread title box ---> edit it. Save.

As the thread starter you should be able to do this.

ONQ

[broken link removed]

All advice on AAM is remote from the situation and cannot be relied upon as a defence or support - in and of itself - should legal action be taken.
Competent legal and building professionals should be asked to advise in Real Life with rights to inspect and issue reports on the matters at hand.

thanking you sir. my initial thread was never directed at Architects. They may be the bain of my life but I would never be so bold!!!!!!

 

[kkelliher]

The main reason for my original post was that given where we have come from and the effect that charging on a % has, is it correct. I understand everyone's point of view but during the boom if you wanted to sell your home you had to accept % charges as that is the way (bar the odd agent) the industry charged, You had to accept % charges from solicitors in the transaction, you had to accept % charges from Architects, from QS's from generally everyone as this was the way the majority charged. This is fact and based on nearly 15 years of dealing daily with these professions. There is always exceptions and I fully accept that but I am speaking generally.

In reality does it take more time or imput to sell a €400k house over a €500k house.... No. Also remember that the advertising done is now centralised through myhome and daft and others for most agents and the clients generally came to them

Does an architect have to do additional work if a client budgets in their build for a €35/m2 tile as apposed to a €150/m2 tile..... No

Does a QS have to do additional work for the same tile senario .......No

Does a solicitor have to do any additional work for the sale of a €400 or €500k house .....No and the insurance arguement does not stand up given that there was always solicitors as in every profession that charge a lump sum for a job.

there are many many examples. I fully understand the time and work involved in most professions to do their jobs and this is not in any way an atempt to undermine that work.

My issue is the anti fairness, anti consumer, anti competitive and pro inflation issue of % charging which was and still is the norm in many professions. The arguement that you have an option to shop elsewhere is somewhat ignorant of reality in my opinion as in many case this was not and still is not an option given the demographics of most professions.

 

[Firefly]

I really don't see what all the hoopla is about to be honest. If you don't want a to go with an architect who works for a % fee find someone who will work for a fixed price.

I'm no expert in this field and have no personal connections to architecure/architects, but I can only guess that architects that engage in cheap, fixed price projects will do little to entertain change requests by clients after the contract has been drawn up without steep charges been applied.

Personally, we plan on a doing a pretty large renovation on our house with an extension etc in a few years time. Getting a good architect will be the number 1 priority for us. From a design perspective the last thing I want is to be sitting in my home after the build thinking "oh, we should really have put that window there and that door there". For other people design is not as important but for us it is. I have been in a few houses which were designed by achitects and you really know the difference. The use of space/light is especially good.

When you think of how long you're going to be living in the house plus the costs if you get the design wrong (in both annoyance and possibly re-work) then it's an easy one for me. I'm not saying that I'd spend willy-nilly but I do think you have to look beyond the immediate costs to the finished product.

 

[Mrs Vimes]

but during the boom if you wanted to sell your home you had to accept % charges as that is the way (bar the odd agent) the industry charged, You had to accept % charges from solicitors in the transaction,

Does a solicitor have to do any additional work for the sale of a €400 or €500k house .....No and the insurance arguement does not stand up given that there was always solicitors as in every profession that charge a lump sum for a job.

So basically, some professionals set their fees in a way you don't like, others don't but you want to ban the ones that do?

 

[monagt]

% fee should be banned!!

I built a very large extension after getting a good price/a rural not a city price from a builder from the country I knew for 20 years.

The Architect I employed, who did not know the builder until they met on my build and who should 'be working for me', told the builder he was doing the job far too cheap, obviously it affected his % fee.

The professional fees should be negotiated up front (which will of course take into consideration, size, complexity, etc of the job) and the punter can get different quotes.

 

[Complainer]

but I can only guess that architects that engage in cheap, fixed price projects will do little to entertain change requests by clients after the contract has been drawn up without steep charges been applied.

Fixed price does not mean cheap. It means fixed.

I don't see a connection between fixed price vs percentage price and willingness to entertain change requests, except where those change requests will necessarily increase the overall bill. Indeed, with a percentage price fee, it is not in the architect's financial interests to entertain change requests that reduce the overall project cost.

 

[Mrs Vimes]

The Architect I employed, who did not know the builder until they met on my build and who should 'be working for me', told the builder he was doing the job far too cheap, obviously it affected his % fee.

Perhaps he was worried that the builder would go under during the build or would cut corners or would not pay suppliers?

 

[Firefly]

Fixed price does not mean cheap. It means fixed.

I agree, but what I am talking about is specifically fixed prices that are cheap which is what's been popping up on this thread/forum. In this case I would think the architect is just going to do the bare minimum and will be chasing other such work rather than entertain client change requests...sort of a "stack em high, sell em cheap" model.

I don't see a connection between fixed price vs percentage price and willingness to entertain change requests, except where those change requests will necessarily increase the overall bill. Indeed, with a percentage price fee, it is not in the architect's financial interests to entertain change requests that reduce the overall project cost.

I take your second point in this regard and perhaps an architect could comment here as I have no experience in this. How are client requests dealt with, on a % cost model, should they want changes that will reduce the overall spend? (happens rarely I would have though but still)

 

[onq]

Seriously! Just because somebody pays a professional a % fee does not mean they are being ripped off.

I've heard of 20% fees being charged by one office, but the official spread of fees review by RIAI suggests this was relatively rare.

ONQ


[broken link removed]

All advice on AAM is remote from the situation and cannot be relied upon as a defence or support - in and of itself - should legal action be taken.
Competent legal and building professionals should be asked to advise in Real Life with rights to inspect and issue reports on the matters at hand.

 

[kkelliher]

So basically, some professionals set their fees in a way you don't like, others don't but you want to ban the ones that do?

if you read my posts properly you will note that this is not the case.

I am one of these professionals. My initial discussion was on the basis of given what happened in the past and the effect of same should it be allowed to continue? As I have outlined on a number of occasions it is the idea not specifics with any one profession

 

[kkelliher]

in simple terms I would love to know what a % fee has to do with level of work required on a porject. Where is the connection. Where is the basis.

Just because its the ways things have been done in the past does not make it right.

 

[onq]

thanking you sir. my initial thread was never directed at Architects. They may be the bain of my life but I would never be so bold!!!!!!

LOL! You're very welcome kkelliher - I value your contributions.

Feel free to make a cogent logical argument about architects from your direct experience.

As RIAD_BSC so stealthily pointed out, I am currently prevented by law from calling myself one in practice, despite my prescribed qualification and 21 years of post-graduate practice experience.

During that time I have met several architects whose work was not up to my standards as well as those whose work was excellent.

Patting ourselves on the back doesn't focus us on areas where we can be better, although only focussing on the duds is unfair to the rest.

And for the record, I have no problem with discussing incidents of outrageous fees, they'll be a million miles away from my experience I can tell you.

A critical comment from a competent professional - not in the sense of his or her being "professional" per se, but of knowing the industry well - would be more than welcome.

ONQ


[broken link removed]

All advice on AAM is remote from the situation and cannot be relied upon as a defence or support - in and of itself - should legal action be taken.
Competent legal and building professionals should be asked to advise in Real Life with rights to inspect and issue reports on the matters at hand.

 

[Firefly]

I've heard of 20% fees being charged by one office, but the official spread of fees review by RIAI suggests this was relatively rare.

ONQ


[broken link removed]

All advice on AAM is remote from the situation and cannot be relied upon as a defence or support - in and of itself - should legal action be taken.
Competent legal and building professionals should be asked to advise in Real Life with rights to inspect and issue reports on the matters at hand.

My favourite new building. I think a 20% fee for something like this to be justified. The site is pretty poor and it was a miracle to put something in there that looks so well.

 

[onq]

in simple terms I would love to know what a % fee has to do with level of work required on a porject. Where is the connection. Where is the basis.

Just because its the ways things have been done in the past does not make it right.

A percentage fee is a tried and tested means of estimating what to charge for work in a given price range and complexity with an expectation of achieving a profitable return for the years work.
The rates are based on a balance of what the market will bear and what the practice needs to earn to sustain itself taking into account all factors that muse be paid for up to the point of delivery of service

Allegations of over-charging are easy to make but not to prove and I would suggest will be impossible to prove in the case of most sole traders.
This is a cyclical industry and at the moment many people cannot earn enough to survive, and many have not been paid for work done including myself.

If the myth of the well-paid architect were true we shouldn't be seeing architects firms go to the wall, or read stories of Part II qualified architects being paid below the minimum wage.
Why do such things happen in my profession - the simple fact is that an architect might have agreed a good fee, but he/she didn't get paid that good fee or were asked to do extra work at no extra cost.
The firm capitulates in order to get some money in, instead of setting up the fee initially with proper terms and conditions and an eye-watering penalty for non-payment of fees by the client - this will come in soon I believe.

Threatened non-payment of fees for good work is something salary-earners and PAYE wage earners never have to face.
Architects face this scenario all the time in relation to competent work already done and with an agreed fee in place.
This kind of criminality has to be dealt with in the medium term but for now its dealt with using percentage fees.

Its a bit like the insurance industry - the actions of rotten clients raise the premiums for the rest of us.

ONQ


[broken link removed]

All advice on AAM is remote from the situation and cannot be relied upon as a defence or support - in and of itself - should legal action be taken.
Competent legal and building professionals should be asked to advise in Real Life with rights to inspect and issue reports on the matters at hand.

 

[onq]

My favourite new building. I think a 20% fee for something like this to be justified. The site is pretty poor and it was a miracle to put something in there that looks so well.

High fees usually reflect one of three things [or all three]

A Difficult Brief

- requires a lot of additional client meetings, design team meetings, meetings with specialists, more design input and more time spent on site carrying out inspections - a difficult brief may arise from a difficult site, a demanding client, a difficult schedule of accommodation to satisfy within the constraints of statutory approvals or more factors. A city hospital is a typical example of such a brief.


A High Standard of Design in a Sensitive Location

- a prominent site or in the present case a difficult one which may have a relatively simple brief. Like the Difficult Brief building, such a building will involve many additional client meetings, more design input and more design team meetings, and the real fee-eater, meetings with stakeholders. The extension of a protected structure public building or the building or extension of a stadium would be two examples of such.


A Starchitect

- people pay over the odds for a "name" because there is a strongly suggested link between buildings by such architects and an anticipated raise in tourist revenue post-completion. Even where end users for this building are not expected, people come to see the building. Daniel Leibeskind's theatre on Grand Canal Square would be such a building, which also had a constrained site and one of the more difficult building types to get right.

On that note, I heard a rumour that the construction cost of the entrance facade alone ran into millions. That was the signature piece of the design, a facade that addressed a major new public space in Dublin's Inner City and it was important to get it right.

=======================

The above is design and complexity and co-ordination on a level far beyond the bread-and-butter work of most commercial practices, where even where there is good design input the fees seldom top 7% and often dip below 4%. Commercial work is the cutting edge of most practices, because its the bulk of the square footage and affects huge swaths of the environment so a good balance must be struck. Given that its the bulk of the work, the occasional 20% fee on mid range work will not pull the average fees earned that year into the 20% bracket or anywhere near it. If the firm sees profits in double figures from such fees its exceptionally well run. Compare such profit levels with other businesses where the principals carry a similar risk of being sued. Its far less rosy a picture.

Building professionals get bad press because they perform piece work for fees - their revenue isn't spread over millions of customers and they have to cover all costs, bad debts and late payments.
I can hear one poster revving up to try to make a point of this, but its the exact same for non-food shops - over half their sales are generated in the three months to Christmas.
The rest of the year, their rent on the premises and their staff salaries, all rest for their continuance on those three months.
Yet you don't see complaints about the 50% mark ups on good being sold in the shops.


ONQ


[broken link removed]

All advice on AAM is remote from the situation and cannot be relied upon as a defence or support - in and of itself - should legal action be taken.
Competent legal and building professionals should be asked to advise in Real Life with rights to inspect and issue reports on the matters at hand.

 

[Docarch]

Just to point out that just because an architect charges a % fee, it does not automaticlly mean s/he are making a huge profit!

Some people may be shocked but I did a small project on a protected structure. My fee was 14.5%. I made a 'loss'!

When I say loss I mean that I know on average how many hours a year I work or can work. I know what my overheads are. I then know what on average I need to make per hour to cover my overheads and pay myself (a fairly normal salary). When I divided the fees charged (at 14.5%) by the hours spent, it came in way below the average hourly rate I need to keep going.

Some people on here seem to think that a % fee means that the architect is coining it!!!

With regard to kkellihers point way back on architects % fees and the example of tiles - some architects (including myself) would not base % fees on construcion costs/contract sums including finishes for that very reason. In my case I exclude from fee calculations things like kitchens, wardrobes, floor & wall, finishes, sanitary ware, etc. It is irrelevant, in most cases, to the architect how much these things cost.

I'd also agree with what Firefly has alluded to. If you are on a fixed fee there is no flexibility. If on a low fixed fee, the temptaion is to take the easy route, keep everything simple so you can get out of the project in the shortest time possible. So opportunities in terms of design can be lost!

The fairest way to charge for work is on an hourly basis but most clients will not go for that!

 

[onq]

I agree, but what I am talking about is specifically fixed prices that are cheap which is what's been popping up on this thread/forum. In this case I would think the architect is just going to do the bare minimum and will be chasing other such work rather than entertain client change requests...sort of a "stack em high, sell em cheap" model.



I take your second point in this regard and perhaps an architect could comment here as I have no experience in this. How are client requests dealt with, on a % cost model, should they want changes that will reduce the overall spend? (happens rarely I would have though but still)

I'll answer, since Complainer is not an architect.

It depends on whether work has been carried out in relation to the original design brief or not.

Percentage fees are not just used to calculate the overall fee, but also the portion of the fee that is allocated to the several stages of the design such as

- initial briefing
- required research
- initial design proposal

(at this point a cost estimate should be produced for client review and its at this point that any major reductions in the brief should be introduced if fee reductions are expected)

- developed design

(including any revisions due to client requirements, Local Planning Policies and Objectives, Fire Safety, Health and Safety Plan, Disabled Access and Building Regulation Compliance Generally)

- Statutory Approvals Processes
- Revisions due to Statutory Approvals Processes
- Tender Process
- Appointment of Contractor/negotiated tender
- Buildability/ Cost-effectiveness review.
- Working Drawings for Construction
- Building Programme/Site Inspections/ Certification of Monies
- Opinions of Compliance

If the client has reviewed costs at initial design stage and instructed the design team to proceed with developed design on the basis of the original design and only changed his mind at some stage after that, there could likely be nett additional fees to pay, not a reduction in fees.

In other words, the client changing his mind after work has been done means he still has to pay for the work that's been done up to that stage.

This is because the bulk of the general design work gets done before planning stage and the bulk of the detail design gets done before tender stage.

Percentage fees are neither fair to all parties nor applicable in some cases.
We once worked with a demanding client whom we knew would make changes all the way through a design.
We agreed a monthly rate for the duration of the project.
The client got our best attention on a daily basis.
We got paid a reasonable fee.

I'll finish by noting that most changes are not reductions and not all reductions in plan area save proportional amounts of money.
On the job I referred to above, there were only two changes that reduced the specification and/or the accommodation.
All the other changes increased the area of the building or its complexity and some introduced new internal spaces.

This reflects my experience on most jobs - clients seldom reduce the brief of their own accord.

ONQ


[broken link removed]

All advice on AAM is remote from the situation and cannot be relied upon as a defence or support - in and of itself - should legal action be taken.
Competent legal and building professionals should be asked to advise in Real Life with rights to inspect and issue reports on the matters at hand.

 

[onq]

Fixed price does not mean cheap. It means fixed.

I don't see a connection between fixed price vs percentage price and willingness to entertain change requests, except where those change requests will necessarily increase the overall bill. Indeed, with a percentage price fee, it is not in the architect's financial interests to entertain change requests that reduce the overall project cost.

Correct on both counts.

Fixed price contracts usually contain a built in level of "fat" to allow for changes that can occur during the design, statutory approval or building process.
As against this with a percentage fee, reasonable change requests introduced at the initial design stage or as a consequence of the design process and statutory approval process do not normally attract additional fees.

An example of this would be the conditions substitution of a creche for two houses in a housing estate layout plan required for planning agreement after permission is granted.
Another example would be a planning agreement drawing graphically showing the conditioned phasing of the development for a planning approval.

Something that would likely attract additional fees would be the complete redesign of a sector or phase of a housing development.
However unless totally different house types were required, the fee increase could be less than 10% or so.

I've commented on the likelihood of overall fee reductions based on changes in a separate post.
Its not so much that its not on the architect's interest, its that fees are due on work already done.
An overall reduction is only likely therefore if an early call is made, usually after the initial design review.

ONQ


[broken link removed]

All advice on AAM is remote from the situation and cannot be relied upon as a defence or support - in and of itself - should legal action be taken.
Competent legal and building professionals should be asked to advise in Real Life with rights to inspect and issue reports on the matters at hand.

 

[onq]

The main reason for my original post was that given where we have come from and the effect that charging on a % has, is it correct. I understand everyone's point of view but during the boom if you wanted to sell your home you had to accept % charges as that is the way (bar the odd agent) the industry charged, You had to accept % charges from solicitors in the transaction, you had to accept % charges from Architects, from QS's from generally everyone as this was the way the majority charged. This is fact and based on nearly 15 years of dealing daily with these professions. There is always exceptions and I fully accept that but I am speaking generally.

The architects scale of fees was dropped by the RIAI - as long ago a 1999 if memory serves.
Please don't hold me to that date - perhaps Docarch or another RIAI member could comment.

Here is a thread commenting on fees in general from Architect Mark Stephens' website -


You might find the comments thereon informative.

Neither the dropping of the scale of fees nor the comments in the thread above show that the percentage fees method of charging was abandoned during the last 10 years.
On the contrary, the thread above suggests that percentage fees, lump sums and time charges all have their place when proposing fees to a client.

There are horses for courses in other words.

ONQ


[broken link removed]

All advice on AAM is remote from the situation and cannot be relied upon as a defence or support - in and of itself - should legal action be taken.
Competent legal and building professionals should be asked to advise in Real Life with rights to inspect and issue reports on the matters at hand.

 

[Docarch]

At the risk of totally deflating your argument, the architects scale of fees was dropped by the RIAI - as long ago a 1999 if memory serves, but dont' hold me to that and perhaps Docarch could reply.

Yes, pretty much 10 years ago the RIAI dropped any suggested or recommended fee %'s from their published fee agreements. What they do now is publish fee surveys (that they issue every couple of years) for architects and their clients to use as a tool to negotiate fees.

The Competition Authority a number of years ago investigated many of the main professions (the likes of doctors, dentists, barristers, etc.) and architects. Their findings were, for architects, that they were happy that there was healthy competition amongst architects in terms of fees and they were also happy that the RIAI was in no way setting or trying to influence what fees should be.