Design/Build: The Answer to Design Fee Woes?

The business start-up experts say that it’s much more profitable to sell a product than to sell your time.  Even if your company is truly a consulting business, it’s better to figure out a way to package your services as a product, as Oracle did.

Even the architectural experts say architects must start charging based on the value we bring to a project, and not our time.  How do we accomplish this when it is difficult for clients to value the service we offer?  It’s common for prospective clients to scoff at an architectural proposal of $100k for a new house with a $1.5 million budget.  They’re willing to spend all of this money on the construction of the house itself, but they don’t want to spend even 5% of it on the architectural services.  This problem seems to be getting worse, as fees have become more and more competitive with outsourcing and desperation, and architectural services have become commoditized.  Architects are making less and less money, and taking shortcuts to do the work in less time, thus increasing their chances for a lawsuit.  This downward trend can’t continue much longer.  Many architects don’t earn enough to make the stress and liability worthwhile. Basements are most susceptible to concrete sinking in areas with poor drainage, high water table and or is built on loose soil or rock that’s quickly washed away.You can find issues caused by sinking concrete here.

Why do so many clients see architects as a kind of drafting service to do the minimum possible to get a permit?  The answer is that many prospective clients don’t understand or value what architects produce.

Design is subjective.  A potential client with no design sense has a hard time appreciating design, and one with design sense may think they can do it themselves, or more likely, they value design but cannot justify the cost.  Design is creative and fun, and it’s expected that many of us would do it for free or almost free, therefore, many architects do.  Clients are, in fact, often impressed and appreciative when you offer creative solutions to their problems, and even help them identify what their problems are.  Unfortunately, good designers come up with solutions so quickly and easily, clients still may not appreciate that it took years of experience to be able to be good at what we do.  Therefore, if we’re getting paid for our time, as most of us do, the better we are, the less we get paid.  Many clients will select an architect based on who has the lowest hourly billing rate, assuming all architects provide the same value.  But a very experienced architect may charge $150 an hour, and an inexperienced architect may charge $50 an hour and take 5 times longer to get the same results as the experienced architect, or may not be able to offer the same quality of service at all.

At least clients have some level of understanding as to what design is.  Even more difficult for non-architects to understand is what goes into the drawings that architects produce.  Although BIM (Building Information Modeling) software has recently started to become more commonly used, most architects still use the same process for producing drawings that have been used for over 100 years.  CAD software essentially mimics the hand-drafting process, and did not gain us much efficiency.  Every project is a one-off design.  The amount of building code and product research, problem-solving, coordination, and drafting time is immense, and incomprehensive to those not in the industry.  When I’ve told friends that it takes about 200 hours (5 weeks of full-time work) to complete a set of construction drawings for a small house, they have been blown away.  And that doesn’t even include the design or the construction phase time.  And what deliverable can you give the client after spending all of this time and money?  A bunch of paper that they don’t understand.  No wonder they don’t value what we do.

Yet every product, whether it is a building, a piece of furniture, or a widget, requires design and drafting.  And clients do value design when it is evident in the end product as in Michael Graves’ very cool and successful product line at Target.  The difference is that most products are mass-produced and the design cost ends up being such a small proportion of the cost of one copy of the item.  With architecture, the design cost cannot be spread over numerous copies unless the building is either a tract home or an off-the-shelf design for a prefabricated building.  Prefab buildings make a lot of sense to me for this reason, yet due to transportation and sitework costs, they are still not as inexpensive as one might hope.  But even though mass-produced products have a proportionally low design cost attached to them, there’s also the psychological affect of not having to pay for the design separately when purchasing a product, even though the design cost is indeed incorporated.  Every business incorporates their overhead costs into their product or service.  How would you like it if your mechanic charged you separately for the time it took him to produce your invoice and answer phone calls?  You would think him or her absurd.  Yet, we know that the time for those tasks is indeed incorporated into the price we pay for a tune-up.

If the architectural fees could be invisible to clients, and rolled into the cost of the building, as with most products, it would be much easier for architects to land projects, and for this they can use service as industrial coating for their buildings from companies as Adhesives Lab and others.  More good architects would be hired, and for a decent wage, and the quality of our built environment would be improved.  This requires a design/build approach.  The total cost for a building or building remodel, including the architectural services, can be quoted to a prospective client.  This approach is not new, and is indeed becoming more common.  However, our concern with this approach is that, in most cases, although not in all, a general contractor wins a project and then hires the architect.  The general contractor directs the architect as the architect’s client.  When this is the case, the architect is usually not able to provide great design, and instead acts as a drafting service again.  The architect does not even have the opportunity to meet with the client in some cases.  A general contractor might take a client’s wish list at face value, provide the lowest quote possible, win the job, and direct the architect to draft permit drawings per the client’s wish list.  An architect, however, doesn’t take a client’s wish list at face value.  Like a good psychologist, an architect knows that lay people don’t always understand what they want or need.  A good architect listens carefully then asks the right questions to help the client identify the problems that need to be solved and the opportunities for improvement.  A good architect digs deep to fully understand the way a client’s business works or the way they live their life, and proposes ideas that may improve upon the status quo, then balancing those concepts with the client’s construction budget.  Therefore, a collaboration between architect and contractor is in the client’s best interest.

Even when an architect is hired for design in the traditional design-bid-build approach, the contractor, not having been involved in the design process, often convinces the client to cut out important parts of the design in order to reduce the construction cost and win the project.  Architects need to gain more control over the entire process.  One challenge is that most architects are not willing to take the financial risk of partnering or joint-venturing with a contractor; therefore, many architects end up simply working for contractors under the design/build scenario.  The other challenge is that contractors may not have much incentive to partner with architects.  They can pitch a design/build approach, and land a project without an architect then simply hire one.  But it is possible to find contractors that have realized that a contractor-architect team has a better chance of winning projects together than separately, and of providing the best possible project through this collaborative approach.

Design/build can be a risky venture, however, because a project is usually won by providing a cost quote upfront before the design process has begun.  With both the architect and contractor collaborating on the construction cost estimate, they should have a better chance at providing an accurate quote than they would separately. However, there are still unforeseen costs that neither party could predict resulting from the plan check process such as ADA or life safety upgrades.  Therefore, the wording of the client contract must protect the firm from having to eat large, unforeseen costs.  In my experience as an owner’s representative, I hired design/build firms, and their approach was to provide a guaranteed maximum price that included a large contingency amount for unforeseen costs, but that amount was given back to me if it was not legitimately needed.  When all or a portion of it was needed, they provided back-up documentation that justified it.  Once this risk is dealt with, the other additional risk for the architect is to take on the liability associated with construction if they are going to truly partner or joint-venture with a contractor, and not merely be a subcontractor to a general contractor.  Therefore, it’s important that the additional risk is offset by additional financial rewards.  If we want to stop being commoditized, we architects must offer a tangible product that clients value.

Elisa Garcia, RA
Garcia Architects