AHPP 952-964.pdf

C H A P T E R 15 Project Definition 15.1 Defining Project Ser vices Glenn W. Birx, FAIA PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S Defining the scope of project services is central to developing effective agreements for professional design services. I NTR OD UC TIO N To help set up...

C H A P T E R 15 Project Definition 15.1 Defining Project Ser vices Glenn W. Birx, FAIA PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S Defining the scope of project services is central to developing effective agreements for professional design services. I NTR OD UC TIO N To help set up a project for success, it is important that the client and architect establish a mutual understanding and agreement on its intent as well as on the expectations of performance of all parties involved. The architect must enter into a professional services agreement to define the project service expectations. Whenever there is a problem concerning architectural and engineering services serious enough to include attorneys and a dispute resolution process, the contract for services will be the initial document referenced by both sides. Moreover, throughout the dispute resolution process the professional services agreement will be the most important document in consideration of the architect’s responsibilities. All discovery and argument will strive to determine an understanding of the services performed in the context of what was defined in the professional services agreement. Ultimate resolution will evolve from a determination of the contracted obligations of the parties and of whether or not those obligations were performed adequately. Building projects are complicated, and most architects would prefer to resolve differences amicably to maintain healthy continuing relationships with clients. Accordingly, a good first step is to establish open communications and to be crystal clear as to the obligations of the parties prior to beginning work on a project. Because there are Glenn W. Birx is vice president of the Baltimore-based firm of Ayers Saint Gross, Inc. He is responsible for Technical Services, including proposal generation and design contract development. Ayers Saint Gross provides design services for colleges and universities around the world. 952 many types of services that architects and engineers can provide, a client may have a different understanding of what those services mean. A clear description up front of services to be provided will help clarify the client’s expectations. Beyond clarifying expectations, a clear description of services can also serve as a basis to adequately respond to the owner’s programmatic requirements, allow the development of an effective work plan, allow for the negotiation of fair contract terms, see that adequate compensation is agreed to, and provide a benchmark for determining when requested services are additional to those in the contract. T YP ES A ND C ATEGORI ES OF SE RV IC E S For ease of understanding services, it can be helpful to organize them into three groups: pre-design services, design-through-construction phase services, and post-construction services. Typically, most pre-design and post-construction services are considered “additional” and those associated with the design through construction phases are considered “basic,” although many additional services can occur in these phases as well. See the section “Basic vs. Additional Services” below for a further description of these differences. Through their training and experience, architects possess knowledge to address predesign issues such as site selection and programming, and almost all clients have the need for design consultation prior to the start of schematic design. Defining the problem is the first step in solving it, and there are numerous ways for an architect to assist in the pre-design phase. Steps in this process include such tasks as goals and visioning sessions, scenario planning, strategic planning, campus or master planning, project definition, program management, and other related activities. Often there is a need for a facilities program, which is a common pre-design task for architects. Facilities programming outlines the required spaces proposed for the facility, with various attributes about specific needs of spaces, including sizes and number of people, lighting, audiovisual needs, finishes, relationship to other spaces, and other issues. The program becomes an important tool for the design phases, and helps the design to proceed more effectively. Some clients may require services prior to design to assist them with fund-raising activities. These might involve feasibility studies and cost estimating; renderings and models for brochures and fund-raising events; graphic design; return on investment analysis; and other services. Pre-design phase services offer excellent opportunities for architects to provide value-added services for the benefit of the project and to extend the relationship with the client. Design-Through-Construction Phase Ser vices Most architects and clients are familiar with services traditionally provided during the five phases of design including schematic design, design development, construction documents, bidding or negotiation, and construction. It is always advisable to review design-through-construction services on a projectby-project basis simply because the client’s building standards or expectations might have changed, or the client may be providing some of the services, or, conversely, may be asking for more services. Services provided can also vary when project delivery methods other than design-bid-build are used, such as construction management, design-build, or integrated project delivery (IPD). The use of new technologies, such as building information modeling (BIM), may also affect the level of project services. Some clients are now expecting certain specific technology use by both the design team and the construction team. Most basic architectural services often include services from consultants for structural engineering, mechanical/electrical/plumbing engineering, and sometimes civil ▶ The backgrounder on Programming (10.5) and Quality Management in Schematic Design (12.2) cover related information. ▶ See Design Phases (10.5), Construction Drawings (10.6), Bidding and Negotiation (10.8), and Construction Phase Services (10.9) for further discussion of these topics. ▶ Project Delivery Methods (9.1) presents a broad discussion of current project delivery options. 15.1 Defining Project Services 953 PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S Pre-Design Ser vices engineering. But most other design-through-construction phase services are usually considered to be “additional.” For example, some projects may require the use of specialty consultants in connection with food service (kitchen) planning, audiovisual systems, laboratories, libraries, theaters, data/communication systems, security systems, “green” or sustainable design, and lighting and acoustical design. The fees for these specialty consultants can be included with the architect’s fee proposal, but when doing so, it should be pointed out that such fees are not normally included as part of basic services. Other “additional” services can include renderings and animations; topographic, furniture, and equipment surveys; life cycle cost analysis and energy modeling; additional bid packages and multiple construction phasing; fasttrack scheduling; building commissioning; graphic design; assistance for permits and other municipal fees; and many others. Owners often request architects to provide geotechnical engineering services and utility and boundary surveys. Post-Construction Ser vices ▶ Project Completion and PostConstruction (10.10) addresses project closeout, assistance to owners during the warranty period, and additional services beyond the architect’s basic services contract. Traditionally the only post-construction phase services offered by architects have been postoccupancy evaluation and building commissioning. However, increasingly architects are offering more services after construction. These services include maintenance scheduling, space planning, renovations, energy analysis and monitoring, disaster planning, tenant improvements, forensic analysis, code analysis, space scheduling, and others. With the advent of BIM technology, some architects are now offering services to assist the owner with the ongoing management of their new facility, such as space planning and renovations, maintenance issues, and the like. PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S Sustainable Design Ser vices ▶ See Risks and Emerging Practices (16.3) for information about the risks entailed in sustainable design. With any new services, there is the potential for differences in expectations of the architect and the owner, and sustainable design is another example. The very definition of sustainable design is not clear among owners and architects. There are several rating systems that attempt to measure the sustainability of a building, including LEED, developed by the United States Green Building Council, and Green Globes, developed by the Green Building Initiative. Within many of these programs, there are various levels of sustainability, such as the LEED Certified, Silver, Gold, and Platinum levels. If sustainability is a goal of the potential project, then an understanding of those goals is required in order to prepare a proposal for services, and the proposal must clearly outline the extent of those services. Most architects’ professional liability insurance policies exclude coverage when a guarantee or warranty is required by contract. This is especially true for sustainable design services. Even if the services that the architect is to provide are clearly outlined in a proposal or contract, architects should avoid contract language that provides any type of guarantee that those services will result in a certification, such as “LEED Silver,” or building performance, such as a specific amount of energy consumption or operating cost savings. Such factors are often beyond the control of the design team, and are affected by construction and operation issues as well as design. Sustainable design services are often required of the entire design and construction team, including the owner and contractors. In addition to outlining the required services of the design team, the proposal or contract for services should also describe what may be required of the owner, the contractor, and the subcontractors. The owner should be aware of the expectations on them, and should require the contractors to participate as necessary to achieve the sustainable goals. • Architect: Overall project management and coordination, infrastructure design, specification of sustainable materials, products, and systems • Engineers: Design of sustainable systems, development of energy model, specification of required materials and products, etc. 954 Project Definition • Owner: Definition of goals, decisions on implementation cost, information on programs and usage, building commissioning, buy-in of maintenance staff, etc. • Contractors: Cooperation in purchasing required materials, requiring subcontractors to meet the goals, construction waste and recycling programs, etc. See LEED Checklists from the U.S. Green Building Council for examples of the goals that various parties related to the LEED design services on a project may strive for. Building Information Model Development ▶ Project Management with Building Information Modeling Processes (10.4) and Small Firms, Small Projects, and Building Information Modeling (11.3) further discuss BIM in practice. Increasingly, owners are requiring building information modeling services on their projects. BIM services can vary greatly, so if they are a requirement it is essential to define those services at the time of proposal or contract. It should be made clear as to which engineers and other consultants will be required to work in the BIM, and expected use of the BIM by the conB U I LD IN G I N FO R M AT I O N M OD EL I N G tractor should be clarified. A ND P RO J EC T S ERV ICE S The AIA has published two documents that are most helpful with defining BIM services: The use of building information modeling in the AEC Both of these documents are designed to be used as an attachment to the owner-architect agreement. AIA Document E202TM–BIM Protocol Exhibit is particularly useful in defining not only the architect’s and engineer’s scope of work, but also that of the contractor and their subcontractors. The chart included in AIA Document E202TM–BIM Protocol Exhibit defines the specific level of development of each model part by phase of the project, by all parties. BASI C VS. ADDITI ONA L SER VI CE S The premise of “basic services” as distinct from “additional services” relates to the associated fees. Another way to look at it would be “services included” versus “services excluded.” The terms “basic” and “additional” services come from the AIA documents, which over the years have become the industry standard for describing architectural services. The term “basic services” has become the benchmark for comparison of fees by clients. This baseline comes from the AIA description of “basic,” to which unique requirements of a project are added or subtracted. Regardless of what they are called, there should be a detailed description of the services with the fee proposal. Similarly, there should be a description of services not included. The accompanying list delineates services that are most often considered as basic and those that are most often considered as additional, according to AIA Document B101TM–2007 OwnerArchitect Agreement. community is changing the culture of firms and the services they provide. Architecture firms currently using this technology, or planning to do so, must be aware of the following ways in which it can change how design services are delivered: • The approach to project staffing may change. You may need more labor hours from your senior architects and more experienced staff assigned to teams earlier in the design process. • In concert with the above, the breakdown and allocation of fees may change. Because design decisions are moved forward in the process, more labor hours will be expended in early phases and less in later phases. • Renderings and animations are easily achieved using a building information model (BIM). Keep in mind that this can bring added value to the client. • Contractors and subcontractors can use the building information model to develop and coordinate fabrication and shop drawings, which can provide added value to them. • This technology makes possible myriad services related to facilities such as space planning, maintenance planning, energy management, etc., and these services can be offered to clients. • The use of a comprehensive construction information database can be offered as a service to the owner, contractor, subcontractors, maintenance personnel, vendors, and others. • Cost estimating can be facilitated more easily and could be offered as an in-house service. • BIM technology can enable more effective construction staging and sequencing to the contractor. Since BIM technology allows studying alternate designs more rapidly, firms must be careful to not offer clients too many options, which can be inefficient and costly to the architect. 15.1 Defining Project Services 955 PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S • AIA Document E201TM–Digital Data Protocol Exhibit, which establishes the procedures the parties agree to follow with respect to the transmission or exchange of Digital Data • AIA Document E202TM–BIM Protocol Exhibit, which establishes the protocols and expected levels of development, and assigns specific responsibility for the development of each Model Element to a defined Level of Development at each project phase B ASI C AND ADDIT IONAL SE RVIC E S IN AIA D O C UM E NT B1 0 1 T M – 2 0 0 7 OW NERAR CHIT ECT AGR EEMENT BAS IC S ERVIC ES Schematic Design Conceptual site plan • Preliminary building plans • Preliminary sections and elevations • At architect’s option: • Study models • Perspective sketches • Electronic modeling • Preliminary selections of materials and systems • Preliminary estimate of the cost of the work (construction cost) Design Development • • • • • • • Plans Sections Elevations Typical construction details Equipment layouts Preliminary materials and systems specifications Updated estimate of the cost of the work PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S Construction Documents • Drawings and specifications that establish in detail the quality level of materials and systems required for the project • Updated estimate of the cost of the work Bidding or Negotiation • If requested by owner, reproduce and distribute the bidding documents. • Consider allowable substitution requests. • Organize and participate in a pre-bid conference. • Answer questions from bidders by addenda. • Organize and conduct the bid opening. • Assist the owner in analysis of the bid results. Construction Contract Administration • Answer questions from the contractor. • Provide interpretations of the construction documents. • Issue supplemental drawings as appropriate. • Visit the site at “intervals appropriate to the stage of construction.” • Report on observed deviations from the construction documents. • Reject work that does not conform to the construction documents. • Review and certify certificates for payment. • Review and take appropriate action on the contractor’s submittals. • Order minor changes in the work. • Prepare and issue change orders. • Prepare and issue construction change directives. • Conduct inspections for substantial and final completion. ADDI TIONAL SER VIC ES • Revisions to the architectural documents caused by changes in instructions or prior approvals from the owner • Changes to the drawings required by the enactment of new codes, laws, or regulations • Non-timely decisions by the owner • Changes to the project size, quality, complexity, schedule, or budget • Extra work caused by performance failure by owner, contractor, or owner consultants • Preparation for and attendance at public hearings or dispute resolution proceedings • Review of contractor’s out-of-sequence submittals • Responses to RFIs where the information requested is in the contract documents • Change orders requiring revisions to the contract documents • Services related to fire or other damage • Review of an extensive number of claims • Evaluation of substitutions where revisions to the contract documents are required • Preparation of alternate bid or proposal requests • Construction contract administration services occurring more than 60 days after the originally scheduled date of substantial completion STEPS FO R DE F IN IN G S E R V IC E S Proposing and defining services to be provided is a critical part of practice and should not be taken lightly. Moreover, do not rely solely upon AIA standard forms of agreement or other contracts. Each project is unique, with varying code and local requirements as well as different client expectations, site conditions, and programmatic requirements. Communication with the client is a key element in determining what is required. Recognize that clients who have hired more than one architect might have 956 Project Definition become aware that they may receive differing services from each firm even for similar projects. Although an engagement may involve a repeat client on a similar project, remember there may be changes in the client’s expectations or standards, and that the practice may have evolved, such as with the use of building information modeling or other technology. These are reasons to carefully define services for each project individually. To do this, use the following steps to facilitate a successful definition of scope of services. Determine What Kinds of Ser vices Are Needed There are many factors that will affect the type, quality, and deliverables for each project. Among them are the program for the project, client requirements and expectations, the client’s level of knowledge and experience in the project type, the need for engineering or specialty consultants to be retained by the architect, the types of other consultants to be hired by the client, the project budget and schedule, the firm’s internal capabilities, and the method of construction procurement and delivery. Use the list in the accompanying sidebar and other checklists to be sure that all required design services are addressed. Contact others who may have worked for the client to uncover potential services that may be expected. Ask the client in what ways other consultants have not met their expectations, so that they may be addressed. Contact the local code and other officials (especially in an unfamiliar locale) to find out the processes and extent of required project approvals. Don’t skip this step, or assume that it is already known. Do intensive research on the services required for delivering a successful project to the client. The new AIA series of Owner-Architect Agreements (AIA Document B101TM–2007 and its related family of documents) is a good start, and as the AIA-endorsed professional services agreements, propose their use for a project whenever possible. However, do not rely on these documents alone in assuming that the client fully understands the scope of services to be provided and has reasonable expectations of the project outcome. Additional communication is strongly recommended to fill voids and provide clarifications. Many clients don’t have a clear understanding of what the scope language in the professional services agreement means in terms of deliverables, the requirements of the client in terms of providing information and making timely decisions, and the services provided by others such as owner’s consultants and contractors. While AIA Document B101TM–2007 attempts to clarify these items in a thorough manner, direct conversation with the client regarding their extent should supplement the written document. A proposal for services, in a letter or some other appropriate format, should be prepared in advance of preparing the professional services agreement. The proposal should expand on and clarify the proposed services consistent with the architect’s understanding of the project. It should elaborate on specifics such as the schedule (duration) of the project, the number of design meetings and public presentations, the type and quality of renderings, the number of site visits, and progress meetings during construction, etc. In some cases, it may be advisable to define the expected number and type of drawings for each phase of the project. If the architect selection process includes a fee basis, the proposal should also define the fee for basic services and for those that are considered as additional services. It may be useful to provide a list of “services not included” (often termed “exclusions”) in the basic services fee proposal, to further clarify what is not included in the basic fee. The proposal should be the starting point for negotiating the professional services agreement, which will more fully describe the scope of services and fees. ▶ Agreements with Owners (17.1) discusses owner-architect agreements in greater detail. ▶ The scope of services proposal is distinct from proposals prepared to acquire projects, such as in response to a request for proposal (RFP). For more on RFPs, see “Qualifications, Proposals, and Interviews” (6.5). 15.1 Defining Project Services 957 PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S Prepare a Proposal for the Ser vices to Be Provided Negotiate the Final Scope of Ser vices ▶ For related information, see the other articles in this chapter, Services and Compensation (15.2) and Negotiating Agreement (15.3). It is always better to negotiate services before discussing and negotiating fees. Since fees are tied directly to the services provided, it is important to have a clear description of services in the proposal. Since many clients do not fully understand this link, it is best to ask which of the proposed services are not needed if asked by the client to reduce the fee. Be prepared with an estimate of the required labor hours and other costs associated with each service, although fees are often based on value provided to the client rather than the hours required to perform them. Prepare the Professional Ser vices Agreement PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S At the conclusion of negotiations, the proposal should be revised. It should contain the final agreed-upon services, schedule, and compensation. Some clients will want the proposal to be included as an exhibit with the professional services agreement. In this case, the final proposal should contain a more complete and detailed description of the scope of services, whether using AIA documents or some other contract form. Remember that AIA documents and other standard contract forms include only general descriptions for the scope of services, and that the final proposal will likely incorporate a more detailed description tailored to the unique requirements of the project. If the client does not accept the detailed description in the final proposal, as with many state or governmental projects, modify or provide a reference to the proposal so that it is represented somewhere in the final agreement or elsewhere in the project, such as in the client-architect correspondence file. Contracts should be written with the understanding that the signatories to them may not be around, for various reasons, at the time when disputes may arise. Absolutely do not rely on verbal agreements. The written record is essential. Monitor and Manage Changes in Scope If the agreement is sufficiently written, it will be clear as to what is and isn’t included in the contract. There should be no question as to the legitimacy of a request for additional compensation in the event additional services are requested. There may be times, however, when unanticipated services arise regardless of efforts to include clarifying requirements in the proposal. In such cases, knowledge of the contract language and its scope is essential so that additional services can be identified and requested. It is best to raise the issue prior to beginning the work, and then to negotiate the additional service in good faith with the client. Most professional services agreements require prior client approval for additional services before the architect can be paid for them. FACTOR S AFFECTING THE SC O PE O F S ER V I C E S The unique nature of most projects requires an understanding of the factors that can have an effect on professional services with respect to their type, quality, and depth, etc. Possible factors that can affect the level of professional services include the following: • Programmatic requirements • Project budget • Project schedule • Engineering consultants included in basic services • Specialty consultants required under your agreement (those outside your core expertise or those usually used with basic services) • Services (consultants or contractors) to be provided by others 958 Project Definition • Your firm’s own internal capabilities • Regulatory requirements and public approval process • The client’s goals, expectations, and values (if you don’t know, find out) • The client’s level of knowledge and experience regarding facility development and building construction • Whether or not BIM technology must be or will be used • The method of construction procurement (e.g., services for a design-build project will be vastly different from services for a traditional design-bid-build project) • The form and terms and conditions of the professional services agreement • The level of risks associated with the project services RI SK ASSESSMENT • Client type. Some clients are more demanding than others. Some argue about every invoice. Some can’t make up their minds about what they like, and then change their minds. Some will be building a building for the very first time. These and many other characteristics of clients can have a dramatic effect on the amount of personhours spent on the project. Assess the client before submitting a fee proposal. • Type of project delivery. The same project can have different levels of risk depending on how the construction is procured. A design-build project can be riskier than a traditional design-bid-build project, which may be riskier than a construction-manager-at-risk project. • Fast-track and other fast construction schedules. Typically, any type of fast-track project schedule, no matter what type of construction method is used, is riskier than the traditional method of starting construction when the bid documents are complete. There are inherent risks associated with starting construction prior to the completion of bid documents. These types of projects have a higher level of risk, and therefore should command compensation associated with that risk. • Construction cost responsibility. The expected responsibility associated with delivering the project design within the owner’s budget should be assessed and understood. The AIA B101 Owner-Architect family of agreements requires the architect to deliver the project on the owner’s budget, and if not as a result of bidding or negotiation, then he must revise the documents at his own expense to meet the budget. This risk should drive the architect to be very careful in developing documents. They should be aware of the local construction market, and should build into the documents a series of alternates or other techniques to see that the project is delivered on budget, so that an extensive redesign effort can be avoided. • Standard of care expectations. Risk will be dramatically increased if a client or his attorney suggests contract language that alters or increases the standard of care, or if the contract contains an indemnification clause which does not link defects in services to negligence, to which it must in order for the Professional Liability insurance to be in force. • Financial and payment. Not being paid on time, or not at all, is obviously a significant risk. If a client is not forthcoming about his intentions for payment, then that should be discussed and understood prior to the submission of a proposal for services. Long time frames for payment can have a detrimental effect on the architect’s ability to perform the work. ▶ See Architects and the Law (5.1) and Agreements with Owners (17.1) for more information about standard of care. ▶ Dispute Management and Resolution (16.4) and Risk Management Strategies (16.1) further discuss dispute and risk management. T HE P R OF E SSI ONAL SER VI CES AG RE E ME N T Once the scope of services has been defined and agreed to, it is critical to memorialize it in a professional services agreement (design contract). No matter what form of agreement is used, it must include a section outlining and defining the services, and neither party should execute the agreement without thoroughly understanding those services. Agreements for architectural services can be prepared in three basic ways. The AIA Owner-Architect Agreements The AIA Document B101TM–2007, Standard Form of Agreement Between Owner and Architect family of Owner-Architect Agreements, has four versions related to the size of the project and identified as B101, B102, B103, and B104. The B102 document is devoted to terms and conditions and is intended to be used with the B200 series of documents 15.1 Defining Project Services 959 PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S As the scope of services is being defined in a proposal, the next step will be to assess the level of risk associated with that scope of services. This can inform the level of compensation required for the project. Riskier projects can require a higher level of compensation. Each project will have a unique set of circumstances related to level of risk, but following are a few examples to assess: ▶ See Table 17.1, AIA Contract Documents by Family, in Section 17.5, for a complete listing of AIA owner-architect agreements. published by AIA, which define services. These can also be attached to any of the other B101–B105 agreements. These scopes include Site Evaluation, Value Analysis, Historic Preservation, Security Evaluation, Construction Contract Administration, Facility Support, Commissioning, LEED Certification, Interior Design, and FF&E Design. The 2007 AIA documents define additional services as “any service not listed as a basic service.” There are two types of additional services: those known at the time the agreement is executed, and those that arise throughout the course of the project. Other Standard Agreements There are other standard types of agreements with which architects are often presented, such as those produced by the Engineers Joint Contract Documents Committee (EJCDC), those called ConsensusDocs, and those produced by the Construction Management Association of America (CMAA). All of these agreements have sections relating to the scope of services. Be sure to review this language carefully and don’t be hesitant to make modifications to accommodate specific services. PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S Owner-Generated Agreements ▶ Owner-Generated Agreements (17.3) presents a systematic approach to evaluating terms in agreements provided by owners. These agreements can come in many forms and variations. They may be federal, state, or municipal government contracts that have not been updated for many years. Unfortunately, some government agencies take the position, “Take this contract or leave it” and will not entertain modifications in spite of out-of-date content. Some owners have their attorneys prepare professional services agreements. Although some attorneys may not admit it, many have limited experience with the construction process, and the resulting contracts can be dangerous. In such cases, read these contracts carefully and have an attorney and professional liability insurance company provide reviews and advice. These contracts can use very broad terms like “as required” or “as necessary,” and they can raise the standard of care of contracted services to an extent that may void protection by professional liability insurance policy. When dealing with government agencies, request to speak to someone in authority (e.g., a state attorney general) who has the ability to make modifications to the contract. If this is not possible, send a letter to the client carefully outlining the scope of services and deliverables upon which the fee proposal is based. Good documentation will always come in handy should a dispute arise. C HAN GE S IN S E R V IC E S As a general rule, never proceed with services considered “additional” without first requesting and receiving approval for further compensation from the client. Although time may be short, a quick e-mail can inform the owner and document the request. If this rule is consistently followed, there will be fewer disputes about services and payments. Doing the work first and then asking for payment is never received well by clients—and for good reason. Clients want to know ahead of time if additional services and an additional fee are required. Identifying additional services requires careful management. Project staff, and especially the project manager, should be intimately aware of services under the project contract. Any proposed changes should be communicated to and discussed with the client in a timely and professional manner. Here architects could take a lesson from contractors, who typically do not hesitate to submit change orders for work they consider not in their contracts. While professional services are harder to define and quantify than a set of bidding documents, architects should take the same approach to being compensated for additional effort. When identified, additional services should be addressed with the same care as any other professional service. A contractual basis that the work is in fact additional should be cited. A reasonable proposal should be submitted in a timely manner, and work should not begin until approval is received from the client. Time spent on 960 Project Definition additional services should be invoiced separately, with a clear distinction between the original contract and the additional service. In the event a dispute arises with the owner regarding whether or not a service was included in the original contract, make every attempt to immediately work out an amicable solution. Set up a meeting or meetings to discuss the issues with parties authorized to make a decision. State the case clearly and professionally and listen to the owner’s position. Many disputes about services are caused by misunderstandings that can be cleared up quickly by discussion. Should this approach fail, follow the “dispute resolution” clause that should be contained in the contract. Act quickly, and do not let these issues linger until they become more contentious. C ONCL USI ON The effective determination and definition of project services includes identifying what work is required, proposing the services to be provided, negotiating the scope of services and fee, and getting approval from the client. The intent of this process is to ultimately have a clear description of services that match the client’s expectations. The fee proposal must be clearly linked to the services proposal. Clear definitions and lists of “basic” and “additional” services are essential. Follow through with an agreement that adequately documents the understandings. Finally, remember to monitor and manage the scope of services as carefully as the design of the project. Doing so can help substantially reduce potential disputes, go a long way toward establishing a professional and productive relationship with the client, and help in bringing the project to a successful conclusion. PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S F or M or e I n f o r m a ti o n The American Institute of Architects Official Guide to the 2007 AIA Contract Documents (Wiley, 2009) by the American Institute of Architects. “Defining the Architect’s Basic Services” (AIA, 2007) by AIA Best Practices: http:// www.aia.org/practicing/bestpractices/index.htm. “Explaining an Architect’s Services: General Information on the Usual Tasks Undertaken by the Architect” (RIBA, 2008) by the Royal Institute of British Architects: http://www.architecture.com/Files/RIBAProfessionalServices/ProfessionalConduct/DisputeResolution/PracticalMatters/ExplainingServices.pdf. 15.2 Ser vices and Compensation David B. Richards, AIA, LEED AP BD+C, PMP Architects consider many variables when determining the amount to charge for architectural services; ultimately compensation is based on the value of the service, the risk in providing the service, and the effort required to provide the service. Also discussed are various methods of compensation and strategies for getting paid. BASIS OF FEES: VALUE, EFFORT, AN D RIS K Compensation is based on three key factors: the value of the service, the effort required providing the service, and the risks in providing the service. David B. Richards is a principal and chief operating officer of ROSSETTI. In his 35 years with the firm, Richards has served as the director of technical services, director of project management, principal, and COO. As a principal and PM, he has managed many of the firm’s notable, complex, large-scale projects. 15.2 Services and Compensation 961 Value Compensation is directly related to the value of the services. Although value is ultimately defined by client perceptions, some successful firms have adopted overall business strategies and market positions based on the benefits their services can provide to clients. The principles are simple: Firms perceived to be the best in a particular arena or to offer unique services will be in demand, and clients will pay a premium for their expertise. Conversely, firms perceived to be “just like everyone else” often will be evaluated on price alone. Value is based on many factors that may include the following: • Design preeminence: a special talent for a particular type of project • Project expertise: successful experience delivering particular project types, including in-depth knowledge of the detailed requirements for a special building type like a hospital, high school, or arena • Quality of service: demonstrated success in delivering projects on time and on budget • Project management/leadership: special ability to lead the project delivery process • Unique services • In-depth understanding of how buildings delight the user while helping the client Effor t PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S Compensation for services is also based on the effort required to deliver those services. Effort is often measured in the amount of time or the cost to provide the services. Whether measured in hours or dollars, the effort is based on understanding the scope of the project and the scope of services to be provided. Part of the process of setting fees includes a thorough analysis of the specific tasks that combine to make up the effort in each phase. Review the scope of services with the client; understand their special needs and specific desires for the project. Will the client need to review multiple design iterations? Do they need full-time representation during construction? Are they particularly risk-averse? Work to get to know the client while the proposal is being developed. Help the client understand the impact of their specific needs on the amount of compensation. Review the scope of services in the agreement with the client to foster a common understanding of the scope of services defined in the agreement. Define any special or additional services in the agreement for professional services. See Figure 15.1 later in this chapter for a sample spreadsheet for use in developing a fee based on the effort required to provide services. Risk There are many risks in a construction project or when providing other professional services and, when determining compensation, an architect must consider the appropriate reward for working to resolve those risks. Client A client can be a significant source of risk. Clients are unique. They have different experiences and expectations. Different clients on the same project may very well require different levels of service. Get to know the client. Work with them to: • Understand the level of service that they will require for the project. • Manage their expectations. • Establish a common understanding of the services to be provided. Even long-term clients can evolve in their expectations and needs. • Review the scope of services and risks with long-term clients for every project. 962 Project Definition When setting fees, consider these and any other client risks that can be identified: ▶ See Risk Management Strategies (16.1) and Architects and the Law (5.1) for further discussion of risk associated with standard of care. PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S • Do they really have the funding necessary—can they pay the firm? An architect may be at risk of not getting paid if the client doesn’t have funding. Retainers may give an indication of a new client’s ability and intent to pay for services. Consider requiring a retainer prior to commencing services. • A client whose dreams exceed the reality of their funding can be a risk for the architect. The client may require multiple iterations of the design as the client struggles to reconcile the funding available for the project to the realities of the project cost. Consider clearly defining the number of design iterations in the agreement and seek additional services if that number is exceeded. • Do they understand the limits in the contract, and do they have reasonable expectations for cost and schedule? It can be helpful to review the terms of the agreement with the client to help improve their understanding of the architect’s scope of services and deliverables. • Is the client able to make decisions to support his desired schedule? • Some clients seem to expect nearly perfect, error-free documents—documents that exceed the standard of care. This can be a risk if the client’s perception persists throughout the process. An architect’s professional liability insurance will not include coverage for services warranted to exceed the standard of care. Work with the client to establish a more appropriate expectation and a fee that reflects those expectations. • Client understanding of the construction process, the quality of documents, and the understanding that the client will benefit from the construction of the project. More specifically, does the client understand that the scope of work defined in the documents is the scope of work they can reasonably expect—no more, no less—and that if it is not shown in the construction documents, then the client didn’t buy it? So, all previous communication notwithstanding, the construction documents define the scope and intent of the project. • Client understanding of betterment vs. omission in the documents. In this case “betterment” refers to the added benefit the client will receive from the addition of omitted items. An architect should not be responsible for the full cost of adding omitted items into a project; however, there may be consideration for the premium cost of adding items late in the process. A client that does not understand the limits of betterment with respect to omissions can be a special risk. To help reduce the risk, help the client understand, early in the process, that he should hold a contingency fund to cover this type of cost during construction. Project Deliver y Process The project delivery process—design-bid-build, fast-track, design-build, third-party program managers—all have different risks, and each requires a different level of service. Design-bid-build is the traditional project delivery method. This is often considered the base delivery process, and the Basic Services of the architect support this approach to project delivery. Fast-track projects often require the architect to provide information for construction before the project is fully documented. The process of issuing documents requires more effort, and there is a significantly increased risk in providing early packages of information. The architect should be compensated for the increased effort and for the risk of rework involved. Discrepancies between packages are inevitable, and the fee should allow for the time to resolve those discrepancies. Contractor-led design-build services can be easier to deliver, but depending on the relationship between the architect and builder, they can also be more encumbered. It is important to understand the contractual relationship with the contractor and the contractor’s expectations for the architect’s performance. 15.2 Services and Compensation 963 ▶ Chapter 9, Design Project Delivery, covers the range of project delivery methods, processes, trends, and emerging issues. Third-party program managers can also help or hinder the process. They can improve the decision making by the client, and they can clear the way for the architect to provide services. Some program managers can hinder the process by involving the architect in more in-depth study of issues and conditions that is necessitated by the standard of care. Project-Specific Risks Project-specific risks need to be considered when preparing a fee proposal. These can include: • • • • • The public approval process Specific site conditions that can require special effort to resolve Unknown underground conditions Limits of the site for soil bearing and other restrictions and easements Especially difficult conditions on the site, contamination, previous construction— foundations Schedule PA R T 4 : C O N T R A C T S A N D A G R E E M E N T S The schedule for a project can be a risk, whether too fast or too slow. Fast-moving projects are subject to more risk. When moving to meet an accelerated schedule, the architect may not have the time to fully coordinate all aspects of the project before early packages are issued. Well-managed, fast-moving projects will have appropriate contingencies to resolve document completion issues. Projects with overly long schedules may allow for ongoing exploration of design concepts far beyond the compensation for the project. Slow-moving projects may also experience code revisions during the process that require revisions to the design and documents. Cost ▶ Defining Project Services (15.1) discusses definition of the scope of project services in further detail. Although the architect’s responsibility for the cost of the work is clearly stated in AIA Document B101TM–2007 Agreement Between Owner and Architect, clients often have different expectations and understandings. Take the time to carefully review the cost section with the client to foster a common understanding. Cost is a risk for projects in general, and the architect’s responsibility for cost is a special risk. During the design phases, work to develop the project within the cost parameters set by the client to avoid costly rework if the project is over budget. If the client is especially risk-averse, encourage the addition of a cost-estimating specialist as an additional service. TYPES OF S E RV I CE S Architects most often provide basic services for projects. But projects are unique and often require additional services. Architects may also provide other services. Basic Ser vices Basic services are described in AIA contract documents and include these phases: • Schematic Design • Design Development • Construction Documents • Bidding and Negotiation • Contract Administration Additional Ser vices Basic services are relatively common to most projects. But each project is unique and each client may require a different scope of services. Some additional services are 964 Project Definition