How do you budget for your architect’s fees?

Should you obtain quotes from multiple firms? Search for fee scales online? Check costs with independent trade organisations or online home-buying advice?

In forming a trusting relationship with an architect, it is important to have in place a fee agreement which is clear and which feels fair to both parties. But how do you know what is the right fee for the services you need?

Two fee proposals for the same project can look quite different to each other. Each architect may suggest a different level and scope of service based on their own interpretation of your brief, and their working methods. This can make their fees hard to compare. The ‘best value’ isn’t always evident at first glance, as the consultant who has quoted more for your project may deliver more benefits, in terms of scope or design quality.

It can be helpful to consider how architects’ fees fit within the project's overall consultant fees. Architects’ fees often exclude services such as kitchen design or lighting design and you may need to invest in this work sooner or later, even if you do it yourself.

To complete the picture, you must also consider the impact of design on the project lifecycle. Design decisions can have a significant impact on the overall project cost. Underinvestment in design can lead to problems later on. If the project doesn’t turn out as you hoped, or it fails to cater to future needs, at some point you will likely spend more time and money to rectify things.

So, it is essential to invest in thorough research upfront so that you understand your own brief and what is of value to you, before setting out a plan to deliver these things within your budget. This initial groundwork, before any real design has begun, is essential to kick-off your project with focus and realism. It will also enable your architect to quote correctly for the work required to translate your values into architecture.

Creating a plan to deliver on your values

Most of our clients are not ready to start the design phase because they need clarity on how their budget, site and values fit together and what is possible. Following an initial consultation call, we offer an initial stage, our ‘pre-design’ services, to establish these parameters. The cost varies between £1000-£5000 depending on the project's ambition, and we discuss this in detail in the initial call. A house extension and renovation is usually at the lower end of the scale, and projects with more complexities will be at the upper end. By going through this pre-design process, you will gain a clearer idea of what your budget can deliver on your particular site, including the design elements that matter most to you.

Overall project budget relative to architect fees

We will work with you during the pre-design services to determine the overall project budget. This figure will include construction costs, consultant fees, fees to statutory bodies and VAT. Every project will require a different approach, but typically, if the overall project budget is 100%, the construction budget will be x%, the fees will be x%, and y% will go towards VAT.

It may be tempting, when allocating your total budget, to increase the construction costs at the expense of the consultant fees. This may increase the short-term gain of more space or more costly finishes. However, this approach needs to be balanced against the long-term return of good design. Remember, if your architect is in tune with your needs, good design will deliver on the value of the end project and, just as importantly, the quality of your life in your new home.

Overall Design Services

The overall design fees for your project usually range between 15-25% of the construction budget. The costs could include the following:

●       Architecture and interior design.

●       Structural engineer.

●       Party wall surveyors.

●       Cost consulting.

●       Building control.

●       Building services design.

●       Audiovisual and lighting design.

During our pre-design services, we will help you establish the right level and scope of consultant input for your project and make recommendations based on the right consultant.

Architects' fees and how they fit within the overall Design Services

An architect will usually express their fees in 4 ways as follows:

●       Fixed fees (a fixed price that reflects their effort and overhead to deliver the outcomes).

●       Percentage fees (as a reference to a percentage of construction costs).

●       Hourly rate fees ( an estimate of time that reflects the cost of standard staff rates to provide the outcomes).

●       Additional service fees (sometimes things don't go according to plan, or you would like more than first agreed, so you need a bit of contingency).

These expressions have been created as industry benchmarks so the construction industry and its clients can obtain measurable figures when making ready reckoners or rules of thumb before the project's quantifiable detail is known.

As a rule of thumb, the spread of these fees across the life of the project are as follows (using the RIBA work stage definitions):

Stages 0 to 1 : Pre-design services, calculated as a fixed fee based on what your needs and options are.

Stage 2 : Concept Design 15% of the fee.

Stage 3 : Design Development 20% of the fee (including preparation of an Application for Planning Permission, if required).

Stage 4 : Technical design - 35% of the fee (including construction drawings and Building Regulations approval).

Stages 5 and 6 : Construction and Completion 30% of the fee, or fees chargeable on a time basis, depending on the agreed procurement route (including Contract Administration).

Payment terms are discussed early and agreed upon within the appointment. We submit invoices at the end of each calendar month or at the completion of a work stage and calculate the progress of the works in relation to the percentages as set out. At the end of the pre-design service, we provide a Gantt chart which looks ahead at the whole project, illustrating how time and work stages correlate.

Fixed Fees (and their limitations)

Architects typically suggest a fixed fee when there is a reasonably high level of certainty of the project brief and the overhead and resources required to carry out the work.

Since design is an iterative process, and there will always be unknowns, fixed fees can be limited, as they generally do not allow for discoveries or changes during the design process. As a result, if those things occur, there is likely to be a constant renegotiation of the fee as the process unfolds.

Percentage-based fees (and their limitations)

Suppose a project has a reasonably defined scope and construction budget. In that case, an architect may prefer to suggest percentage rate fees as the best solution.

The rate will typically reflect industry-standard fees based on current market studies. Architects will generally cross-check the percentage rates and make adjustments to consider their effort and overhead to ensure sufficient resources to service the project.

The downside to this method is that the construction cost sometimes correlates very little with the resources required to deliver your project. For example - small complex projects in heritage environments are very time intensive, and tight urban sites will need significant input to maximise the storage and usable floor areas.

Time-based fees (and their limitations)

For smaller projects or tasks where the scope of the services could be more clearly defined or where the time required to complete the job is challenging to establish, time-based fees may be better suited. At the start of the service, we estimate the time necessary to achieve the results and keep you informed on the progress relative to the forecast.

This method can sometimes feel open-ended and high-risk, so it's essential to have a good and transparent working relationship for this fee basis. It can be very challenging to use these fees during the early stages of a project when parties are establishing trust with each other.

Additional services

Building projects can be very complex. Especially when working on a renovation project within an existing building. Since it is impossible to account for all eventualities or eliminate all risks at the beginning of the project when we agree to the fees, architects will include additional service requirements as a contingency to account for additional costs incurred during the project.

An example may be that after we have stripped back the floor finish in an existing building during the construction process, we discover that the existing floor joists are no longer fit for purpose. On rare occasions, you may also have a change in circumstances that cause a difference in the project's direction.

Our Fee Structure

Once we have carried out the pre-design services, we will suggest a fee structure based on a combination of the fee methods outlined above. We use a combined fee structure to improve the limitations and boundaries set using a single system. We find this approach allows us to remain open during the design process to the project's potential and value and to maintain clarity on the potential return on your investment.

How do we put all the fees together?

Each project typically starts with a quick introductory chat via email or phone. From there, we move to a 30-minute video call to better understand your project.

Suppose it is a project that we can service, and you would like to know more about it. In that case, we suggest a complimentary follow-up call to discuss our services and how they may be relevant to you.

During this call, we will explain our pre-design services and associated costs. We will also take you through the overall design services, including how we charge for our fees in general, so you know what to expect.

A typical fee structure may look like this:

●       Pre-design services: between £1,500 and £5000 - depending on the level of complexity of the project.

●       Design and Construction services: between 12 and 18% of the construction budget, depending on the level of investment you would like to make, and the level of input from other consultants.

The most important thing to consider is the value that the service is providing you and how it fits with your longer-term return on your investment. A relatively insignificant investment increase in the early stages of the project, relative to the overall costs, can be the right decision.