Both the owner and architect should be keenly aware of what services are included and what are excluded to avoid contentious debates. An inefficient design and documentation process can lead to increased costs that cannot be passed along to the owner.Īs we will discuss below, it is absolutely critical that the scope of services is well defined to limit exposure for all parties. However, the architect carries the risk of underestimating the amount of work required to provide the instruments of service.
The architect is contractually obligated to identify additional services before starting work on them so the owner has a chance to avoid those fees if possible.Īrchitects can benefit from the stipulated sum structure since they know what they will be paid and can increase their profit by being more efficient. However, owners have to properly manage their decision making process to avoid changes in scope, which will lead to additional services costs. Owners like a stipulated sum fee because they can establish a fixed budget at the beginning of the project and everything is included if the scope of services is well defined. The owner and architect agree to the scope of services and the associated fee for that scope. Lump Sum or Stipulated Sum FeeĪ stipulated sum fee is a fixed fee for a set of services as defined in the contract. The most common alternate to stipulated sum or percentage basis is an hourly fee, but there are some regions and project types where fees are calculated on a unit cost basis. The AIA B101 Standard Form of Agreement Between Owner and Architect includes options for Stipulated Sum (often called Lump Sum), Percentage Basis, or any other method agreed to by both parties. There are four main compensation structures used in the industry. Fee development takes all of those into account.
Architect's Fee WorksheetĪrchitects, interior designers, and engineers should be fairly compensated for the value they offer, the risks they carry, and the effort they apply to a project.
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We will cover the four types of fee structures, what is and is not included in standard fees, a series of principles to consider when developing an architectural design fee, and then we discuss four ways to build a competitive and profitable fee. The Role of Negotiations in Fee Development.
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