There are three traditional methods by which an architect can charge fees to her client: the percentage fee, lump sum fee, and hourly rates. Inspired by the lean startup strategy, there’s a fourth method that’s emerging amongst younger practices: incremental tasks.
This is the last in a series of five articles that will assess the benefits and disadvantages of the four fee methods. It will analyse each from the points of view of both the architect and the client, and ask how well they tie an architect’s income to the value of her labour.
An archive of the series can be accessed here.
The architectural fee is split into a series of discrete tasks, each charged as a miniature lump sum fee. The intention of this method is to break a project down into very small components, with a single deliverable for each.
The tasks might include things like building a physical model of the design, or preparing a town planning report, or writing a construction specification. Typically, the tasks will require a unique combination of time and expertise to complete, so are likely to be charged at different rates. Across an entire project, there would easily be as many as 50 tasks that require anything from a couple of hours to a couple of dozen.
At the beginning of the project, the architect presents her client with the list of tasks required of full architectural services. Each task is accompanied by its own price tag. Some might be essential e.g. a sketch design floor plan, others might be optional e.g. a physical model. Like ticking the boxes on a room service breakfast menu, the client is then empowered to select which tasks she wants her architect to perform.
There is an inherent transparency to this process, as it demystifies an otherwise long and complex architectural process. However, the elegance of the room service menu works because there are only a dozen items and a handful of choices to make. An architectural services menu will have many more of both, which carries the risk of bamboozling the client with too many choices. It’s important therefore for the architect to provide clear explanations of each task, and the implications of not ticking certain boxes.
The essential benefit of the incremental tasks method is that the architect gets paid for every task she completes and only the tasks she completes. If the client decides partway into the process that she does in fact want a model to show her family, then she already knows how much extra it will cost her and is probably comfortable in paying the asking price.
On the surface, it seems that this is the perfect way to calculate an architect’s fee.
Dig a little deeper, and it becomes clear that like the lump sum fee, incremental tasks aren’t easily able to adapt to changes in design scope. If the brief at the outset of a project is for a modest 150sqm house, but this expands to 200sqm during the sketch design phase, the time required of subsequent tasks is likely to be higher than first anticipated. This introduces the hassle, likely compromises and possible conflict associated with fee renegotiation.
Not having used this method across a full project before, I’d welcome any reader feedback on this issue. Fixing it would make this method substantially more appealing.
The incremental tasks method is one championed by architectural consultancy firm, Blue Turtle Consulting. I attended a seminar of theirs four years ago, an experience I blogged about here. Their argument is that a client presented with fee options is one more likely to value the services she is provided, and more willing to pay for extra services when required.
I don’t have a problem with this position at all, indeed I applaud it. However, there are many parts of architectural services that aren’t negotiable. Offering any of these up as options for a client to not tick risks the architect either delivering a subpar service or surrendering control over the results of her own design process. It seems simple enough to remove a fittings and fixtures schedule from the architect’s responsibilities, but what if the she can’t stand the fittings selected by her client?
Combined with the limitations of the method in adapting to changes in scope, I don’t believe it is well suited to high quality design outcomes.
By breaking a project that takes many hundreds of hours over many months down into small chunks, it becomes much easier for the architect to calculate how much time is required for each. She still needs to be careful not to shoot too high or too low with her assumptions, as this will either lose her the commission, or win her the commission but cost her dearly. However, the risk of the former is reduced at least as the client is able to deselect as many increments as she likes to bring the fee in line with her expectations.
Given the greater responsibility placed on the client in determining the services her architect is to perform, incremental tasks best suit projects where the client has worked with her architect before. This might be a developer who works regularly with a single architect to deliver many small (or large) speculative projects, or even a private client with experience in the industry.
Service or product
The incremental tasks method is strongly tied to the service offered by the architect, though this is mitigated by the calculations she is required to perform at the outset to determine how much each task will cost. A fittings and fixtures schedule for a $5m mansion will be substantially larger than one for a $500,000 renovation, thus will be charged at different rates.
- It’s fair. The architect is paid for the tasks she performs, no more and no less. This established a clear relationship between the work done by the architect and her fee.
- It’s empowering (for both client and architect). The client is able to choose which tasks her architect will perform and which she won’t. Likewise, the architect has a mechanism in place to request more money when required: “Yes, I can design that extra piece of joinery for you, that will cost you an extra increment of $2,000. Are you okay with this?”
- It’s fragile. Like the lump sum fee, changes in scope that affect already agreed-upon future tasks are hard to renegotiate.
- It’s inflexible. With the tasks required of the architect set in stone from the outset of the project, she is disincentivised to decide on a whim to change her process or build that model after all. Doing so would undermine the very basis of her fee structure.
- It’s risky (for the design). With ample opportunity for the client to save a few dollars here and there, the architect risks not having a say in something that might actually end up having a strong influence on the quality of the design outcome.
- Incremental tasks, author’s own image.