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walker
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Posted: Mon Oct 27th, 2008 04:59 pm |
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First time for everything, right? This a a moderate residential addition. 4k sq. ft., My estimate was around 8k.
I came up with an overall (estimated) fee, broke it into 3 equal installments and am about to invoice the middle installment. When I calculate my time spent so far, I need to add $600 to the middle installment to even up. what would you do?
I am thinking of telling client this as a "heads up", billing the original installment, finishing the job and sorting it out later. They are very happy with the work and progress thus far.
thanks
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brudgers
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Posted: Mon Oct 27th, 2008 05:11 pm |
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Is your contract flat fee or hourly?
If it's flat fee, you eat the loss.
If it's hourly, then decide if it's worth the potential of an aggrevated client.
If you bill, be prepared to explain the reasons for the overage.
On the other hand, an hourly proposal with an estimate is just that.
If something takes longer than anticipated, the client pays.
However, in my opinion, an hourly proposal should be billed hourly not in three equal installments.
Last edited on Mon Oct 27th, 2008 05:12 pm by brudgers
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walker
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Posted: Mon Oct 27th, 2008 05:39 pm |
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It's kind of an open ended flat fee. I give projected hours and multiply that by my hourly rate, which I depict in the contract. I realize I need to improve my method. I give my best guesstimate of the total and divide by 3. 1/3 deposit, 1/3 upon cd's, 1/3 final.
I have language in my proposal which does not bind me to the flat fee. Mainly due to numerous design changes, changes to scope of work, etc. I can justify some time and the other time is just my miscalculation. To get to the point, it took some extra, unanticipated time to get the building to look good. Mainly due to inherent challenges in the job. Could I have stopped earlier and left the building "almost" as good as it could be....sure. Would I ever compromise my work and the finished product for money? No way.
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Coach
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Posted: Mon Oct 27th, 2008 05:53 pm |
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walker wrote: It's kind of an open ended flat fee. There's no such animal. You need to fix your proposal/contract.
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walker
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Posted: Mon Oct 27th, 2008 06:10 pm |
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There's no such animal.
I am aiming for a flat fee setup with contingency factors.
You need to fix your proposal/contract.
agreed.
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brudgers
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Posted: Mon Oct 27th, 2008 07:02 pm |
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walker wrote: It's kind of an open ended flat fee. I give projected hours and multiply that by my hourly rate, which I depict in the contract. I realize I need to improve my method. I give my best guesstimate of the total and divide by 3. 1/3 deposit, 1/3 upon cd's, 1/3 final.
I have language in my proposal which does not bind me to the flat fee. Mainly due to numerous design changes, changes to scope of work, etc. I can justify some time and the other time is just my miscalculation. To get to the point, it took some extra, unanticipated time to get the building to look good. Mainly due to inherent challenges in the job. Could I have stopped earlier and left the building "almost" as good as it could be....sure. Would I ever compromise my work and the finished product for money? No way.
If you provided a flat fee proposal and the client was reasonably responsible, then you pay the dumb tax.
Like you said, you were unwilling to compromise your work regardless of the cost.
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Kellhammer
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Posted: Mon Oct 27th, 2008 08:47 pm |
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| It's either fixed or a not fixed estimate. If your written contract outlines the scope of the project. Basically, a written description of what the project design consists of. Then an addition to the scope of work could be construed as an additional service. Therefore billable as an extra. I like to address these things in my contract so I can be justified in such a billing. I stipulate once the design is complete and signed off on by both parties then any changes after that could be considered billable as an additional service. Also, I stipulate changes made to the design after the permit has been issued can also require additional service work. So far this has worked well for me in avoiding any issues with the client and getting paid for my hard work. If neglected to have anything close to that in your contract then just keep working and accept that you need to pay your dues. Unfortunately, not every minute of every hour of every day can be considered billable. Last edited on Mon Oct 27th, 2008 08:51 pm by Kellhammer
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skyhook
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Posted: Tue Oct 28th, 2008 04:44 am |
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The original proposal, in whatever format, was short to begin with. Hourly rates typically go to change orders (agreed in writing, issue by issue so as to have no suprises) or other agreed upon processes of discovery involving due diligence and unknown time factors. Being an addition, there may be have been unforseen issues (structural), but the idea that the exterior design was an unforseen event may be pushing it.
Sometimes we pay the dumb tax ( I like that one Mr. B) because generally it washes out in the big picture and good faith with our existing clients is the best and cheapest form of good advertising. Just my opinion.
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Nico Ann
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Posted: Wed Oct 29th, 2008 06:12 pm |
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If you have it written in your contract for increased fees for changes, you can likely bill for the additional time required for those changes. But, it sounds like the majority of the the additional time was just a miscalculation on your part, which you will just have to eat the cost for and use as a learning experience.
Billing the client for the additional time for their changes could get tricky also depending on how you have it stated in your contract, so if you add extra fees make sure you are following what is stated in the contract and also what is understood by the client as the agreement. If they are interpreting the agreement as fixed fee with no additional costs, I would suggest eating all the cost and making sure your next contract is more clear. If you do charge them, make sure that you are able to spell out very specifically to them what the extra costs are for and make sure they are legitimate owner changes that caused added work/expense. Also, in the future, it would be a good idea to inform the client that changes will increase costs when they request the change and get these things in writing (like, say, a change order  ).
Keeping the client satisfied is always a big priority though. Eating the additional expense now could keep you client happy so they will refer other people to you and increase your profit in the long run. In our company, I have seen us lose good clients over fees that were higher than estimated (both by our doing and owner changes). I've also seen our company eat a lot costs to save client relationships... costs we caused by bad time estimation, costs from abundant client changes (there is a limit to what they will pay over base fee regardless of the additional work they request), and costs caused by our consultants that they passed on to us where we didn't necessarily feel justified in passing those additional costs to owner, whether they were legitimate or not. We have some clients we are willing to eat these expenses for to maintain the relationship and other that we are not willing to go that extra mile for. A lot of it comes down to your relationship with this client.
Additional project expenses can be a tricky area to manuever in. The first step is to have very clear contracts and keep written documentation of everything. But, with situations like this you really need to judge what you feel right charging them for, your relationship with the client and what you think their understanding of the agreement is, and what you think their reactions would be to additional expenses. If you think they will be open and accepting to justified expenses caused by their changes, then go ahead bill them those costs... but it sounds like you will have to eat some of the costs yourself for your own misjudgement of the extent of work.
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King
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Posted: Wed Oct 29th, 2008 06:51 pm |
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walker wrote: First time for everything, right? This a a moderate residential addition. 4k sq. ft., My estimate was around 8k.
If the house is $100/sf, you are only charging 2%, which is very low. If the house is $200/sf, you are only charging 1%, which is extremely low. I think 5% fee based on construction cost is normal. I am thinking of telling client this as a "heads up", billing the original installment, finishing the job and sorting it out later. They are very happy with the work and progress thus far.
Of course they are happy, the fee is too low. Next time, you should research better before u agree to a fee.
Last edited on Wed Oct 29th, 2008 06:53 pm by King
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walker
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Posted: Wed Oct 29th, 2008 08:13 pm |
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I bid the job too low, period. Its tough for me, coming up from a family who never had money, to charge too much. I also need to learn "hubris" (self confidence). Bottom line is that I am making 120 an hour for work that I enjoy doing. Don't tell anyone but I sit home in my underwear and do this work. Could be worse. Because the market and field would charge 5-8% for the job, does that mean that I have to as well? Am I doing a disservice to the profession by charging too low? Perhaps I am doing a disservice to myself but with these economic times, and from what I just mentioned, I can not complain, even if I do take a hit on this job. The comments about taking the loss in exchange for good credibility and future work are well taken. These clients have already started talking about the next job. And believe me, I already told them they only get the "good deal" on the first job, next job to expect a higher proposal.
I do have language in the contract about additional fees and for that work I will be able to invoice. As for the rest, I am going to bill them for my total time on the project, which will still put them less than what they should and would have paid to any other architect but me, and put the ball in their court. Essentially, they are getting the goods and services that they pay for, regardless of legalities. You know, there are still some ethical, good hearted people left in this world.
All this said, I will raise my fee next time Thank you all for the informative feedback.
Last edited on Wed Oct 29th, 2008 08:14 pm by walker
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skyhook
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Posted: Wed Oct 29th, 2008 08:46 pm |
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This is why, I appreciate the forum. You can throw out ideas, issues and concepts to your fellow toilers and get back vast and uncensored input to chew on.
Scrape aside the peas and carrots and get right to the meat.
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walker
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Posted: Wed Oct 29th, 2008 09:15 pm |
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| agreed. The feedback I get here is invaluable. Anyone in NJ? drinks are on me.
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rudoneyet
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Posted: Thu Oct 30th, 2008 01:31 am |
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"I also need to learn "hubris" (self confidence). Bottom line is that I am making 120 an hour for work that I enjoy doing. "
If you're making $120 an hour I wouldn't worry too much but I wrote to mention that while it's good to have self confidence you really don't want to have hubris which is more like arrogance and usually is associated with a fall.
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walker
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Posted: Thu Oct 30th, 2008 02:34 pm |
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oops, hubris not really what I thought it meant. yea, I don't want hubris in that way. thx.
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pgharchintern
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Posted: Mon Nov 3rd, 2008 05:45 am |
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walker wrote: First time for everything, right? This a a moderate residential addition. 4k sq. ft., My estimate was around 8k.
I came up with an overall (estimated) fee, broke it into 3 equal installments and am about to invoice the middle installment. When I calculate my time spent so far, I need to add $600 to the middle installment to even up. what would you do?
I am thinking of telling client this as a "heads up", billing the original installment, finishing the job and sorting it out later. They are very happy with the work and progress thus far.
thanks
I've been doing residential work for about 5 years now. I learned the hard way about underbilling my clients as well as over billing. There is a fine line that only you will know when you can cross. One thing is that you really do need to do your home work.
The psychology of architecture in dealing with clients is knowing yourself first o YOU trust yourself? Can You do what you SAY you can do? If you say what you are going to do and do what you said you would do then you will never over or under bid your clients. They will see the logic and learn to trust you and pay you, provided you constantly communicate with them.
If they start calling you first then they don't trust you and that you need to nip in the bud. YOU must control the pace of the project, if they control the pace then no matter what you do, you have either under or over bid the project. If you don't think you will be able to control that pace, back away from this project.
Psychology of Architecture is probably the hardest to master. Communication must, must, must be under your control. YOU must set the tone of meetings, emails, phone calls by being the person in charge. YOU are the doctor who is doing the surgery, not the client/patient; YOU are the attorney arguing the case, not the defendant; YOU are the architect that takes all the information from the client and with their input determines the best possible solution.
Write the program, communicate it, get the input for change, create the design development, communicate it and get signatures, then do the CD's and communicate those with confidance. Be fair but be in control otherwise clients will run you ragged and you will always have underbid and will be underpaid.
imho
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bruceprice
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Posted: Wed Nov 5th, 2008 09:56 pm |
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If I were you I'd eat the loss. Because the contract was open ended you could definitely ask for the money but I think a happy client who might refer you to others is more than worth the 5 hours of free work. You never know, maybe they'd happily pay you the extra money but I wouldn't want to risk leaving a bad taste in their mouth.
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