How an Architect Calculates Their Fee

For the most part, there is a lot of mystery surrounding how an architect calculates their fee. This is compounded by the fact that different architects calculate their fees using different methods. In comparing quotes then, you may struggle to make any comparison at all. To banish some of the mystery and ensuing confusion, we have briefly expanded on how architects typically calculate their fees.

Below are the 4 most common fee calculation methods used in architectural practice in South Africa.

1. Project Cost-Based
In this instance the architect will take your budget for the construction works and calculate their fee using the table below:

The ‘Value of Works’ (your budget) will place your project in one of the 12 ‘Cost Brackets’. The fee for your project is calculated by adding the ‘Primary Fee’ with the ‘Secondary Fee’ for the respective ‘Cost Bracket’ your project falls into.

Architects will typically use this method of fee calculation where the project scope is well defined. The architect’s fee is tied to your budget up until the final cost of construction works is determined. At that point, the fee shall be adjusted to reflect the actual construction cost vs. the assumed cost (budgeted amount) and the architect will submit a final invoice reflecting any difference payable.

Note: Some architects may not use this table for fee calculation, but simply apply their own percentage fee to your construction budget. In those cases it will most likely range between 6-18% of the construction budget. What percentage each firm charges will depend on your project’s complexity, their company size, experience, and level of service they provide.

2. Time-Based
Projects where the scope is not well defined and projects of a small scale, are often charged using an hourly rate. Billing by the hour can very quickly amount to a sizable fee. Clients are very often surprised by just how much time architects spend on the process of design, drawing and documentation, even if it is to the benefit of the project outcome. We advise to be careful entering into a time based fee contract for your project.

In your contract with your architect, you can control the number of hours worked on your project by setting a ‘cap’ to the amount they can bill you in total. This will obviously be reflective of your budget, but must be realistic in terms of the specifics of your project and what the architect can achieve within that time-frame.

3. Square Metre Rate-Based
Though not really a recognised standard, some architects charge by the square metre, regardless of the project type. We have found this to be suitable in alteration and addition projects where there are too many unknowns to accurately apply a cost estimate to the build. Very simply, the architect’s rate applied to the amount of square metres you plan to alter and/or add will yield their total fee.

Square metre rates can vary greatly, but please take note that the variation in rates will be relative to the service that architect provides. Don’t expect the same level of service, expertise, and quality of work between one architect charging R100/m² and another charging R1000/m².

4. Combination of Time and Project Cost-Based
This is an interesting option. It applies a time-based fee to the early stages of a project, so the scope of the project and it’s concept design can be determined. The latter stages of the project then get charged on a project cost-based fee. This allows clients, without a definite idea of their project, to work with an architect on a time based fee up until a point where all the unknowns are mitigated. At that point the project cost can be quantified and hence a project cost-based fee can be implemented for the remainder of the project.

Smaller to medium sized architecture companies will generally be flexible in the structuring of their fee, and more open to a mixed arrangement of time-based and project cost-based, than a larger company may be.

In Conclusion
When receiving quotes from architects, take the time to understand the service you are paying for and the value your architect will provide. For most, the cost of building a new home will be the largest single investment they make in their lifetime. When one realises the gravitas of that statement, it should surely hit home that you need an architect to work closely with you, to ensure that investment is a sound one.

This is a topic for a future blog post, but the value an architect can bring to your project will result in direct savings to you, both now(construction methods, material, finish and fitting selection, spatial optimisation, etc.) and in the future(building orientation, low-maintenance, energy efficiencies, sustainable technologies, etc.).