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ACH 231 Lecture 05 (Design Contracts Part 1)
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ACH 231 Lecture 05 (Design Contracts Part 1)


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  • 1. Design Contracts Part 1-Contract Considerations Architectural Selection Methods Compensation Methods Contract Services Scope Part 2-Highlights of the AIA B141 Document
  • 2. Contracts
    • What is a contract?
      • A contract is a mutual agreement, which requires two or more parties and a matter or consideration to which the parties must agree upon
  • 3. Considerations for Contracts
    • Architectural Selection Methods
      • Comparative Selection
      • Direct Selection
      • Design Competition
  • 4. Architectural Selection Methods Comparative Selection
    • Pre-selected group of Architects sent an invitation to present qualifications, or
    • Requests for Proposals (RFP) are solicited publicly (through newspapers)
    • Architects respond by submitting a proposal
    • Owner selects a small group to be further considered – Short-list
    • Owner interviews short-listed Architects
    • Owner selects Architect based on qualifications
    • Owner and Architect negotiate fee
  • 5. Architectural Selection Methods Comparative Selection/Fee-Based Selection
    • Owner requests fees from short-listed firms
    • Often done in conjunction with an Interview
    • Owner determines what weight the fee carries in final selection
    • Not favored by Architects
  • 6. Architectural Selection Methods Direct Selection
    • Owner contacts Architect directly
    • Owner selects Architect based on:
      • Prior work performed by Architect for Owner
      • Recommendations from other Clients
      • Word-of-Mouth (Reputation)
    • No comparative selection involved
    • Most preferred method by Architects
  • 7. Architectural Selection Methods Design Competition
    • Owner initiates design competition
    • Open to all Architects, or
    • Open only to select list of invited firms
    • Award criteria are issued with competition announcement
    • Commission to follow through with design may or may not be part of award
    • Designs are submitted, reviewed and one is selected
  • 8. Considerations for Contracts
    • Compensation Methods
      • Percentage of Construction Costs
      • Stipulated Sum
      • Cost + Fee
  • 9. Compensation Methods Percentage of Construction Costs
    • Historically is an accurate method
    • Disadvantages:
      • Assumes service cost relates to amount spent on construction
      • Allows construction economics to determine fees
      • Requires rigorous agreement and determination of construction cost
    • Requires waiting until end of project to determine final construction cost, and fee
    • Doesn’t work well for very small or very large projects
    • Does not take into account inflated construction costs due to high-end finishes
  • 10. Compensation Methods Stipulated Sum
    • A specified amount of money (fee) for a specific scope of service
    • Both items must be negotiated and understood to avoid disputes
    • Calculation of fee is often initially based on %-age of construction cost – starting point
    • Most commonly used method
  • 11. Compensation Methods Cost + Fee
    • Often called “Time-and Material” (T&M)
    • Based on hourly rates for personnel
    • Reimbursable expenses are extra
    • Most fair to Owner since the effort expended results in the cost
    • Final fee amount may not be known, unless a “cap” is used – “Not-to-Exceed”
      • GMP-Guaranteed Maximum Price
    • Useful when scope of services cannot be determined
  • 12. Compensation Methods Cost + Fee
    • Hourly rates:
      • Direct Salary Expense multiplied by a factor to cover overhead expenses and profit
      • Direct Personnel Expense (hourly plus that person’s overhead costs), multiplied by a factor for expenses and profit
  • 13. Considerations for Contracts
    • Contract Services Scope
      • Standard (Basic) Five Phases
        • SD, DD, CD, B/N, CA
      • Designated Services List
        • Comprehensive “shopping list”, allows both parties to clearly determine what needs to be done and the respective costs
      • Special Services List
        • For very limited scopes
  • 14. To prepare for the next lecture……….
    • Refer to CD-ROM in the back of your book for copy of B141 document
    • Review for reference
      • Pages 1-15; B141 Instructions
      • Pages 16-27; B141- Standard Form of Agreement Between Owner and Architect with Standard Form of Architect’s Services
      • We will reference these documents in Part 2 of this lecture.
  • 15. NEXT LECTURE Part 2-Highlights of the B141 Agreement