Wednesday23 July 2014

Why has the RIBA ditched its fee scale graphs?

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Why has the RIBA abandoned fee scale graphs in the depths of a recession when the profession needs them the most?

Why has the RIBA abandoned fee scale graphs in the depths of a recession when the profession needs them the most?

The first thing to say is that there have not been “fee scales” for some time. The RIBA operated a mandatory minimum fee scale from 1872 to 1982. In later years this was shown as sliding scale graphs for different building types. In 1978-9 the UK’s Monopolies & Mergers Commission, decided that mandatory fee scales were anti-competitive and ordered them to be withdrawn by all UK professional bodies.

The RIBA duly changed to “recommended” fee guides, then “indicative” fee scales, before a 2003 Office of Fair Trading ruling against any form of fee scale.

The lack of any fee information was bemoaned not only by professions but also by clients seeking guidance on what they should pay their consultants. The RIBA negotiated an agreement with the OFT whereby it could publish fee guidance based on actual fee survey data that had been independently collected and interpreted.

Credit: Paul Blow

As this was based on actual fees, rather than the ambitions of the profession, the survey data gave significantly lower fee levels than the previous “indicative” fees. The survey data also did away with the in-built “front-loading” of the previous RIBA fee scales, intended to help practices’ cashflows. A higher proportion of the fees were now shown to be in the latter work stages, reflecting real working practices and changing procurement systems (such as design and build), where all the design work isn’t complete before tender or even the start of construction. The survey data was based on relatively small samples, particularly for smaller scale domestic projects, where the demand and reliance on this data was highest.

The fee guidance published by the RIBA since 2003 only covered new and refurbishment work procured in the “traditional” manner (ie standard architects’ services for work stages B to L, by competitive tender, using a JCT standard contract). This was not applicable to the majority of projects now being done under very different forms of appointment and procurement.

Limitations of data

The RIBA fee guidance graphs 2003-9 gave a simple range of fees as an average of a wide range of different types of buildings and projects with very different client demands on architects’ services. For example, there can be a great difference in the architects’ inputs required for the refurbishment of an historic listed mansion, compared with an extension to a recently constructed house, but they were all mixed up in the same fee range. Although the RIBA did carefully describe and qualify this fee information, its limitations were probably not fully understood.

Some members of the profession consider that any form of fee guidance lowers fees as clients negotiate downwards from the published information, particularly in a recession. This pressure along with concern that the fee guidance was being misunderstood and misapplied, led the RIBA to abandon numerical fee guidance.

As I have advocated in previous columns, architects’ fees should be calculated to match the specific requirements of each individual project and its client. Practices need to carefully assess the project requirements and work out exactly what is required (time, expenses, outputs), assess the competition, the risks and financial return.

Clients are seeking more certainty of costs and don’t see the benefit of paying more for their architects just because they have produced a more expensive building. It should really be the other way round; the architect being paid more for saving construction costs for their clients. Percentage fees are great when construction costs are rising, but if they drop, as they always do in a recession, then architects’ fees decline proportionately. The architects’ work stays the same, but the return varies depending on the contractors’ market and performance.

My personal view is that fee scales and generic fee graphs have done a great disservice to the profession. Picking your fee from a graph may be quick and easy, but it is foolhardy to rely on fee data that does not represent your actual cost base or the specific services you have to provide for a particular project and client. The RIBA has done the right thing for the profession and clients.

“Good riddance” I say to fee scales and graphs! RB


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