MANAGING FEES -for Building Design practices PART – I
Post 478 by Gautam Shah
Stating design fees or charges to potential clients is a routine exercise, but one that needs lot of thought, and reconsideration or improvisation from one project to another.
The discussion here is based on presumption that the designer is practicing a ‘pure design’ or ‘design-only’ business, and not co-conducting build or supply work for the projects. In the later case the person or the organization may be liable for paying other taxes.
A person-organization operates as an Architect, Interior Designer or Landscape architect. In each of these case the basis and terms for fees are different. It is advisable to state fees separately for each aspect of practice, while clearly stating ‘what constitutes that project’. This also follows that drawings, details etc. must remain distinct documents for each practice. Inclusion of following clauses is advisable >>
1 “These terms, conditions and fees are for the Architectural (or Interior Design or Landscape Architectural) Services only, and must not be clubbed with any other service or services that have been provided, or will be offered by us.”
2 “The services are offered by me/us in our capacity as an Architectural Designer (Interior designer or Landscape architect, as may be relevant). As a professional designer we do not sell or supply any components, units, goods or materials, or provide on rent, hire or provide on any other basis: human resources, plants, tools, equipments, implements or gadgets. We also do not undertake any type of operations or servicing job. We do not provide any operational surety or performance guarantees or warranties for the items, systems, or schemes likely to be generated or formed through implicit or explicit design, suggestion, instructions drawn, described, specified in our design.”
Fees’ details must be stated (submitted), discussed, or negotiated in one meeting, or through one statement-letter. A designer nominally provides professional design services and the Invoice will include charges only for this. Other costs for like extra copies, documentation, additional survey or report preparations, conveyance, must be billed separately. It is better to use external agencies that provide such services, and bill the client directly. These arrangements reduce many tax hassles.
Cost of a model, Sample, Prototype, Pilot, Animated walk-through or a Typical design (to be repeated number of times) is always problematic. Delivery of such an item at ‘actual making cost’ can deny the designer ‘the cost of concept’. Charges for such an item must be inseparable part of the main design fee. Which in other words mean, the main design fee may mention delivery of such an item, but details that can give impression of its exclusive cost may be avoided.
A professional like an Architect, Interior Designer or Landscape-architect is retained by the client-owner-organizer of the property, and not by the executing agencies like Vendors or Contractors. So discuss and insist on payment of professional fees directly by the client-owner-organizer of the property. A professional designer must declare that the charges discussed here are for One site, One project, Only for the service that is mentioned, and for One year currency of the project.
Architectural Fees are of several types
1 A fee on Lump-sum base, or a fixed amount irrespective of the cost of execution of the project.
2 A fee based on total cost of man-hours (and stationary, use of equipment, etc.) plus some Lump sum amount or a percentage amount for ‘other expenses’.
3 A fee based on the percentage of the cost of the project. This has the advantage that a percentage share goes up (or down) with project cost escalation. To avoid losses due to down scaling of the project and too much escalation for extraneous circumstances, an upper and lower tag is considered prudent, respectively, by the client and the professional.
In next few articles of the series other aspects of Building Design Fees will be discussed, such as:
- What is the scope of Project?
- Meaning of Design services,
- What is included in the total cost of a project?
- Stages of Fees collection-payment,
- What is requested Design?
- What is an approved Design?
- What is an executed Design?
- Currency period of the Design Services?
- Assumed cost of the job,
- Estimated cost of the job
- Actual cost of the job
- Specific issues of Interior Design services.