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Consultant Design Fees

 

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Consultant Fees Percentage Fee apportionment
How are fees calculated? Percentage Basis
How are fees charged? Lump Sum Basis
Expenses Time-Charged Basis
Payment Schedule Payment of Fees
VAT Expenses and Disbursements

Consultant Fees

There are many different ways that fees can be based on. Some of these are as a percentage of construction costs (in the region of  6-12% for new construction and 10-20% for alteration or extension of existing buildings.), an hourly rate based on the consultants charging rates, or a breakdown by type of services etc. What needs to be considered is that a consultant in setting the fee needs to consider the difficulty of the site, what services are required, the type and quality of materials to be used, the size of the project, the complexity of the program and the timeline of the project.

Something else to consider about the design fee is that consultants are not glorified "draffies". That is we work in conjunction with Social Services, Local Authority, Environmental health, Highways, Planners, Building control, Structural engineers and the client to develop a design that works, is site and need sensitive and adds value through the design. Please understand that consultants are trained to design and adapt buildings and we consider many factors before we even put pen to paper.

The consultant will always quote professional fees for each stage or the whole of the works. Sometimes these will be dealt with as a percentage of the construction cost and at other times as a fixed lump sum fee. Fees are made known to the client prior to the works being undertaken. (Back to top)

How are fees calculated?

There's no single method for computing consultants' fees. Representative consultant-owner agreements drafted by the American Institute of Consultants (a 56,000-member association which "promotes a high level of professionalism," though not all consultants choose to belong to it) specify that payments for basic services should be made monthly, but leave the method of calculating the fee entirely up to the consultant. One consultant's advice:
"Ask about fees in the first interview; it helps avoid misunderstandings later."
Fees are usually structured in one of three basic ways: as an hourly rate for time and materials, as a stipulated sum, or as a percentage of the construction cost. Many consultants use a combination of approaches, such as an hourly rate for one phase of the project and a fixed fee for another, all to add up to a spelled-out maximum percentage of the construction cost. This usually ranges from 10 to 17 percent (or more) of construction costs, depending upon the consultant and the size and complexity of the project (Back to top)

How are fees charged?

Fees can be charged in a number of ways :

Percentage fees - Fees can be based on a percentage of the construction cost, initially calculated using an agreed estimated cost and later, using the actual construction cost. This rate will vary relative to the level of service provided, the type of building, and also depend on whether the project is new-build or alterations to an existing building.

Lump Sum – In this case, the fee is fixed for clearly defined package of work fixed at the outset. Any additions to the package arising after services have commenced can either be negotiated with you, or, if the extent of additional work required is difficult to assess, by applying an agreed time charge rate – so much per hour.

Time Charge - when the extent of the project is uncertain or when services cannot be related to the value of construction work, an hourly or daily rate would be applied. (Back to top)

Expenses
These may be included within the agreed percentage, lump sum or time charge fee or, more often, they may be charged separately. Items are usually charged at cost plus a transaction handling charge of 10 – 15%. For certain fees such as those due to the local authority for planning or building warrant application, the client will be asked to pay direct. (Back to top)

Payment Schedule
Payment will normally be due on a regular ongoing basis, either monthly, or on completion of each stage of the consultant’s work. Interest will normally be chargeable on invoices not paid within the stipulated time scale. (Back to top)

VAT
For most projects, and for all but the smallest contracting firm, VAT will be payable on the works. If the building project involves alterations to a listed building, such works may be VAT exempt. If your consultant is VAT registered, VAT will be payable. (Back to top)

Percentage Fee apportionment
For guidance, the portion of the total percentage fee due for each work stage or partial work stage is usually as shown in the following breakdown:-

 

 

Amount

1.

Inception, Feasibility, Initial design, Planning application

40%

2.

Preparing To Build, Building Control application

 

 

Detailed Design and Tender operations

30%

3.

Building in Progress, On site inspections, Final inspection

30%

(Back to top)

Percentage Basis

This is best used for straightforward building projects. The consultant’s fees are expressed as a percentage of the total construction cost, ie. the cost as certified by the consultant of all works, including site works, executed under the consultant’s direction. Before fees can be estimated, client and consultant need to establish the services to be provided, the approximate construction budget, and the nature of the work. To avoid misunderstanding it is always advisable to clarify what is included in the percentage fee and what is not. (Back to top)

Lump Sum Basis

Lump sums are best used where the scope of the work can be clearly defined from the outset. It is necessary to define the parameters of services, i.e. time, project size and cost, where applicable, so that if these are varied by more than a stated amount, the lump sum itself may be varied. (Back to top)

Time-Charged Basis

This basis is best used where the scope of the work cannot be reasonably foreseen or where services cannot be related to the amount of construction. For example, where the consultant's appointment is for repairs and conservation work, fees could be on a time-charged basis. (Back to top)

Payment of Fees

Clients may prefer to pay fees against a plan of programmed installments. Alternatively, fees may be paid at the completion of each Work Stage. (Back to top)

Expenses and Disbursements

In addition to the fees charged, consultants expect to be reimbursed for all expenses and disbursements properly incurred in connection with the appointment. Expenses might include, for example, the cost of all documents, drawings, maps, models, photographs, travelling expenses etc.

Disbursements are charges necessarily incurred by the consultant and properly to be borne by the client. Consultants maintain records of all expenses and disbursements and will make these available to clients if requested. (Back to top)

 

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