Basically, architectural and engineering firms enter into one of five different type contracts:
Lump sum.
Cost plus fee (either fixed or percentage) with a guaranteed maximum price.
Construction cost percentage. The architect's and or engineer's fee is based upon the constructed cost of the job (as provided by the contractor's price), multiplied by a percentage which is usually small - 1 to 3%.
Labor multiplier. Labor cost of the architect or engineer time s a multiplier (usually 2.0 to 2.5) plus reimbursables (i.e., at straight cost or in some cases cost at a multiplier of 1.1 or higher). Reimbursable expenses include travel, meals, blueprints, expressage, etc.).
Agreed upon hourly rate for various levels of architects or engineers.
Architects and engineers usually bill under phases, and their agreements show the percentage of the contract which will have been billed through the end of the phase. A standard for an engineering firm and a yardstick for cumulatively billed percentages by phase:
(A)Schematic Phase - 10%
(B)Design Development Phase - 35%
(C)Construction Documents Phase - 75%
(D)Bidding/Negotiation Phase - 80%
(E)Construction Phase - 100%
There are several different ways to negotiate a contract. Engagements by engineering firms can be very profitable because of failure on the part of the owner to monitor, interpret, manage and account for cost data.
We can be of assistance in this area because of our extensive knowledge and experience, particularly form "the other end" of the process.
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