Building a Commercial Project – Architectural Costs

To ensure a successful commercial project, getting the right architect for the job is essential, as explained in our previous blogs, and it is important to understand the architectural costs involved. It does not mean, though, that it is necessary to get the most expensive or the most experienced professional in town. Read on to find out how architectural fees are calculated, and how it is possible to save on some of the costs.

Type of Fee 

The major component of the total fees charged by an architect comprises fees for actual architectural services. A much smaller percentage goes to reimbursing their expenses on project-related activities: travel, communication, and document reproduction). The client should also be prepared to pay the retainer fee – this sum is a percentage based on the total amount of architect fees and is charged when the contract with the architect  is being signed. 

Fee Determination 

There are three ways to calculate an architect’s fees: lump sum (also known as “fixed fee”), a percentage of the total construction cost, and time-basis (an hourly or daily rate). 

A fixed fee is normally charged when every aspect of a project – its requirements, time, and cost – are clearly defined from the beginning. It can be changeable, though, if time and cost vary by more than a stated percentage. Besides, if it is not possible to determine all the requirements from the start, or the marketplace chances, then a calculated lump sum is used: the fee is calculated based on the previously agreed percentages of project cost, either after settling the estimated project cost, or at the beginning of each stage, based on the latest approved cost.

Fees charged on a percentage basis (based on the final construction cost) are also suitable for projects that are clearly defined from the beginning. Normally, the net fees charged by an architect include the architectural fees, and their coordination of engineering and other services. The gross fees are charged for any other consultant fees (that stem from managing engineers and other specialists) and are added to the net fees. 

Charging on a time-basis is the usual practice when the scope of services cannot be foreseen or is not related to the cost of construction, or additional services are provided (anything ranging from surveys and feasibility studies to rezoning and committee of adjustment). 

Fee Allocation

The total fee can be broken down into portions based on the service phase. The Ontario Association of Architects (OAA) outlines the following phases of services and fee ranges: schematic design (12 – 18%), design development (12 – 18%), contract documentation (40 – 45%), bidding / negotiation (2.5 – 6.5%), and contract administration (25 – 35%). 

Another point to keep in mind is that combinations of methods to determine architectural fees described above in the Fee Determination section can be applicable to different scenarios: different aspects of service on the same project, limited services, or changes in the services provided (their nature and scope) as the project progresses.

Ways to Save

Even though it seems there are quite a few fees to think about before engaging an architect’s services, there are ways to save. The best approach is to hire a firm for a turn-key service: let them do all the work involved in building a commercial project – from surveying and building permits to hiring all the contractors. It is less expensive to hire an architect as a project manager for the entire process than engaging each professional separately (not to mention the headaches avoided by not having to supervise every single engineer and trade on your own). Find out more about turn-key services in our next blog!

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