Construction cost and overall budget for the project are not the same.
The overall budget will include all professional and legal fees and expenses, the statutory charges for applications for planning consent and building warrants, a contingent sum for unforeseen events and other costs such as furniture, equipment, land acquisition, finance charges and VAT, in addition to the construction costs.
In this method, an architect’s fees are expressed as a percentage of the total construction cost, i.e., the cost as certified by the architect of the works, including site works, executed under a building contract. Before fees can be estimated, client and architect need to establish the services to be provided, the approximate construction budget and the nature of the work.
Lump sums are best used where the scope of the work can be clearly defined from the outset. It is important to define the parameters of services – i.e. time, project size and cost – where applicable, so that if these are varied more than an agreed amount, the lump sum itself may be varied.
This basis is best used where the scope of work cannot be reasonably foreseen or where services cannot be related to the amount of construction. It may be wise to set an upper limit on fees to be incurred, perhaps on a staged basis. Records of time spent on services will be made available to clients on reasonable request.
The Incorporation strongly recommends clients to select on quality issues such as demonstrable design skills, management expertise and track record. If fee cost is an important factor, this must be weighed carefully against these qualitative aspects to ensure that best value overall will not be sacrificed.
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