Appointment

The RIBA publishes a number of different appointment documents to suit projects of different sizes and types. These documents range from the RIBA Standard Agreement 2010 (2012 revision) to the RIBA Domestic Project Agreement 2010 (2012 revision): Architect, with other forms for sub-consultants and other consultants. To accompany these forms there is also A Client’s Guide to Engaging an Architect (2013 edition, RIBA Publishing, May 2013). Further details are given in the book Guide to RIBA Agreements 2010 (2012 revision – Roland Phillips and RIBA, RIBA Publishing, Oct 2012). These forms, which are regularly updated to take account of changing legal and economic circumstances, are available in both print and online versions. They provide a useful basis for formalising an appointment, although there are alternative forms available, including the NEC3: Professional Services Contract (PSC) (Thomas Telford, April 2013) and others.

The use of standard forms brings many advantages, including backup in the form of guidance and advice and the benefit of the experience of others. But you must still take great care to get the appointment right:

• Set down the scope of works accurately.
• Ensure the appointment interlocks with those of other consultants.
• Ensure the appointment is appropriate for the project and client.
• There must be clarity on what is to be expected and delivered by all parties.

In particular it is worth noting the impact of the Unfair Contract Terms in Consumer Contracts Regulations 1999, which in Regulation 5 states:

• “5(1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.”

This requires that if the client is a residential occupier (‘the consumer’) then the terms of the appointment agreement should be individually negotiated with them to make them enforceable. How feasible this is in practice is another matter, and it is worth following the advice from the RIBA and others on this to ensure that your agreement will have adequate force.

An appointment as a designer also brings with it responsibilities under the Construction (Design and Management) Regulations 2007 (CDM). The principal obligations are to eliminate hazards and risks during design and to provide information about remaining risks to the CDM co-ordinator. In practice it is also frequently necessary to explain the requirement for, and then to arrange and ensure the appointment of, an appropriate CDM co-ordinator (or any replacement terminology for the role) by the client. Check with the Health and Safety Executive (www.hse.gov.uk) for further information.

However you seek to arrange matters, you need to ensure that an appointment, in writing, is in place for all projects that the practice undertakes, so that both Standard 4 of the ARB’s Code of Conduct 2010 and Guidance Note 4 of the RIBA Code of Professional Conduct are complied with.

Fees

Appointment documents will spell out the fees due at various stages of the project and for any particular tasks carried out, but first you need to agree the fees and a method for calculating them.

From your side, the fees you charge should:

• allow you to resource the job adequately
• cover additional non-fee earning overheads, such as premises costs, administration, insurance, recruitment, training, research and marketing
• pay for any specific, job-related expenses
• reward you for any risk taken
• reward you for the reputation, skill and track record of your business
• allow a reasonable level of profit
• be regular enough to ensure reasonable cash flow
• be predictable enough to allow you to plan ahead.

There may be good reason for discounting your fees in order to attract new clients or business, but such discounts will have to be balanced by additional fees charged elsewhere.

From the client’s point of view, the fees should generally be less than:

• the added value provided by your services, less any risk they carry in using your services
• the cost of obtaining an equivalent (or possibly simply adequate) service from other sources
• the amount that they have available to spend (balanced across the whole project)
• the amount they can provide at any one time from their cash flow.

Fees can be calculated in a variety of ways, based on:

• time
• a percentage of the contract cost
• a lump sum (or a series of lump sums)
• a share of any profits made or increase in value achieved
• a combination of the above.

The way fees are charged rarely directly reflects either your needs or those of your client. You need to calculate whether the fees to be paid will both cover your business requirements and sit within the client’s spending envelope. You should ideally be able to demonstrate both of these, and therefore be able to maximise your fee within the client’s available resources.

A worked example of a fee calculation is given below, although more accurately it is a calculation of the cost to the practice of running a project.

Payment schedule

The proportions of fees to be paid at each stage of a project, as specified in a payment schedule, has long been a matter of contention, particularly when the scope of works is subject to change. It is vital to get this right so that it will provide a reasonable cash flow to the practice to support the work on the project. The apportionment should be clearly laid out in the appointment document, and there should be provision for fees to be invoiced for on a monthly (or a more frequent) basis.

You should aim to weight the apportionment of fees at the front end of the job (in line with the hours expended on the project). The fees will have to cover numerous factors, including:

• the considerable costs involved in landing the job
• the up-front investment and resourcing required
• the risk of the job running into trouble or even being cancelled at planning, procurement or any other stage in the delivery process.

Your client may choose not to see it in the same light and it will be down to your negotiating skills to achieve a schedule acceptable to both sides.

The RIBA no longer publishes any recommended or indicative fee scales following developments in competition law, but fee guidance based on statistical data, including information on proportions charged for each project stage, is available. The RIBA has also developed a fee calculator that is available free to members and Chartered Practices from the members’ areas of its website. Full details on fee calculations can also be found in the Good Practice Guide: Fee Management (2nd ed. 2012) by Roland Philips.

Fee calculation - Worked example for an extension to an office building

Expenses

The appointment should be clear about the expenses that may be charged and any additional handling fee. Typically, expenses will include travel, postage and printing, but they may also include the purchase and copying of documents, drawings and maps. If you pay statutory fees (such as for planning and building regulations) directly then a charge for these should also be made.