Quick Guide
How to Calculate Architectural Fees
1. Understand the Two Main Fee Structures
Project Cost-Based Fees:
Detailed Breakdown of Percentage-Based Architectural Fees
In the architectural world, fees based on a percentage of the project cost are common for their simplicity and direct correlation to the overall project scale and expense. This method adjusts the architect’s compensation in proportion to the total investment in construction, ensuring that the architect’s efforts are compensated fairly relative to the project’s demands and complexity.
Here’s how these fees are typically distributed throughout the project lifecycle:
Stage 1: Inception
- Objective: Establish the project’s scope, objectives, and feasibility.
- Fees: 2% of the total architectural fee, covering initial consultations, preliminary site analysis, and the establishment of project requirements.
Stage 2: Concept and Viability
- Objective: Develop and refine the initial design concepts based on the client’s requirements and site constraints.
- Fees: 15% of the total fee, reflecting the creative input and strategic planning necessary at the early stages of design.
Stage 3: Design Development
- Objective: Enhance and detail the conceptual design into comprehensive design documents.
- Fees: This stage is 20% of the total fee due to the intensive design efforts and detailed coordination with various technical disciplines.
Stage 4: Documentation and Procurement
- Stage 4.1: Documentation for Statutory Approval
- Objective: Prepare and submit detailed drawings and documents for approval by local authorities.
- Fees: 10% of the total fee, involving the production of detailed construction documents.
- Stage 4.2: Procurement
- Objective: Finalise construction documents and oversee the tendering process to select a contractor.
- Fees: 20% of the total fee, reflecting the critical role this stage plays in preparing for construction.
Stage 5: Construction
- Objective: Supervise construction to ensure adherence to plans and quality standards.
- Fees: Comprising 30% of the total fee, this stage involves regular site visits, management of construction activities, and resolution of design-related queries.
Stage 6: Close-out
- Objective: Finalise the project, including all inspections and documentation necessary for project handover.
- Fees: Represents 3% of the total fee, covering activities to close the project formally and hand over to the client.
Understanding the allocation of percentage-based fees across different project stages not only helps in planning and budgeting but also ensures transparency between the architect and the client. This fee structure methodically aligns payment with project milestones and complexity, facilitating a smooth architectural process from start to finish. This methodical approach to structuring fees ensures that payment corresponds closely with the value provided at each stage, making it a preferred choice for both architects and clients planning significant construction or renovation projects in South Africa.
Time-Based Fees:
For projects that are less defined, require special expertise, or are small in scale, SACAP suggests using time-based fees. This method ensures that you pay for the professional time your architect spends on your project, suitable for projects requiring unique design solutions or facing complex technical challenges.
2. Factor in Project Complexity
SACAP categorises projects into three levels of complexity—low, medium, and high, each affecting the fee scale:
- Low Complexity: Includes basic designs such as simple single story dwellings, barns, sheds and boundary walls.
- Medium Complexity: Encompasses projects such as larger residential dwelling units, restaurants and warehouses.
- High Complexity: Covers projects with complex design requirements, such as commercial buildings, apartment blocks, hotels and shopping centres.
SACAP categorises projects into three levels of complexity—low, medium, and high, each affecting the fee scale:
3. Additional Costs and Services
Architects may charge extra for services beyond the standard scope, such as travel costs, environmental studies or specialised design work. SACAP recognises these could be charged on a time basis or as a fixed fee depending on the service’s complexity.
General Disbursements
- General Disbursements cover various additional costs incurred by architects during a project. These include travel and mileage expenses for site visits or client meetings, billed at standard rates or as agreed upon in the contract, encompassing transportation and possible accommodation costs. Printing and reproduction costs for large-scale plans and detailed drawings also fall under this category, with clients reimbursing the architect based on the size and number of documents required.
Specialised Software or External Consultations
- Complex projects may require specialised design software or the input of external consultants such as structural engineers or environmental analysts.
- Cost Implication: Fees for these services or tools can be significant and are generally passed on to the client.
Permit and Regulatory Fees
- Most construction projects require various permits and approvals from local authorities.
- Cost Implication: These fees are payable directly to the respective governmental or regulatory bodies but are important to consider in the overall project budget.
Emergency or Expedited Service Fees
- If a project requires rapid completion or sudden changes that require immediate attention, additional charges may apply.
- Cost Implication: Expedited services can incur higher rates due to the need for rapid response and increased resource allocation.
Modification and Revisions
- Changes initiated by the client after the approval of initial plans can lead to additional design time and documentation.
- Cost Implication: Architects typically charge for significant revisions, especially if they occur after project milestones or require substantial work beyond the original scope.
By understanding and planning for these additional costs, clients can ensure a more accurate budget and smoother project flow. These costs should be discussed and possibly outlined in the architectural agreement to align expectations and financial planning from the outset of the project. Including a contingency fund for unexpected expenses is also a prudent practice that can help manage unforeseen financial burdens during the architectural process.
4. Adjustments and Special Considerations
5. Example Calculations
Let’s take the example of a new freestanding residential home.
The budget for construction of the home is R4 million. This type of project would constitute a medium-complexity project. Therefor we look at the SACAP fee table for medium complexity:
Table 2 Medium Complexity
Extract from SACAP guidelines for professional fees 2023
Here we see that under the value of works column, the project cost falls under row 4.
To calculate the fee we add the Primary + Secondary fees together.
The primary fees are given to us as R346 886.84
For the secondary fees we then have to calculate: 12.96% on the value of the works over R2 000 001.00:
(R4 000 000.00 – R2 000 001.00) x 12.96% = R259 199.87
Therefore Primary + Secondary = R606 086.71
This would then be the total architectural fees for a full architectural service on this example project.
This fee is then broken down into the architectural stages as outlined above in Project Based Fees, see here
Architects will generally make these calculations excluding VAT – the project cost as well as the fees.
This is the total fees for the standard range of full services. There are options you can take to remove portions of the standard service such as principal agent and principal consultant which would reduce this fee. Discuss this with your architect to assess your options here.
There may be additional fees on top of this such as the ones mentioned previously, including heritage restoration projects, special design service etc. SACAP lists all of the additional services in the guidelines.
Conclusion
Understanding the structure of architectural fees, as outlined by SACAP, helps in effectively planning and budgeting for professional architectural services. It’s advisable to discuss fee structures with your architect early in the planning stage to ensure transparency and align expectations.
How to avoid surprises
Determining when certain costs are additional or included in the standard architectural fees can depend largely on the specific terms of the contract agreed upon between the client and the architectural firm. Here’s how someone can distinguish between included and additional costs:
Reviewing the Contract
The most straightforward way to understand which costs are included and which are additional is by carefully reviewing the architectural services contract. Contracts typically outline:
- Scope of Services: This section details what services are covered by the base fee. It should clearly state what the architect will deliver within the agreed-upon fee.
- Exclusions: The contract should list services that are not included within the fixed fee, which might require additional payment if needed during the project.
Common Inclusions and Exclusions
- Typically Included:
- Basic design and drafting services.
- A set number of revisions or meetings.
- Standard project administration and coordination.
- Typically Excluded:
- Travel beyond a certain radius from the architect’s office.
- Additional services like interior design or landscape architecture.
- Fees paid to government agencies for permits and inspections.
- Extraordinary revisions or changes after project milestones.
- Specialised modelling or simulations that require external consultancy.
Monitoring Project Changes
- Change Orders: During the project, if changes are requested that fall outside the scope of the original contract, the architect should issue a change order. This document describes the change, its impact on the project’s scope, and the additional costs involved.
- Regular Updates: Regular budget reviews and updates can help keep track of what expenses are part of the contracted services and which are additional. This ensures transparency and helps manage costs effectively.
Establishing Open Communication
- Continuous Dialogue: Maintaining open lines of communication with your architect throughout the project is crucial. Regularly discuss any changes or potential additional services and their costs as the project evolves.
Understanding whether costs are additional or included typically relies on a clear, well-documented contract and open communication between the client and the architect. By being proactive and discussing potential scenarios where additional costs might be incurred, clients can better budget for their projects and avoid unexpected expenses. This preparation and clarity help ensure that both parties are aligned throughout the project’s duration, leading to smoother project execution and a more successful partnership.
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