This document discusses different types of contracts between architects and clients for architectural projects. It covers the basics of why written contracts are important, different types of contracts including oral agreements and standard association agreements, elements that make up a valid contract, and different methods of architect compensation and project delivery such as design-build. It provides information on contract documents, proposal letters, and how the contract influences the architect's design and construction administration duties.

1. GUC – German University in Cairo
Architecture and Urban Design
ARCH 702 Legislation, Professional
Practice and Contracts
Fall 2017
Instructor:
Dr. Yasser Mahgoub
Contracts
1

2. The Contract!
The Most Important Document
That You’ll Never Ever Use…
Hopefully

3. The Contract!
A legal agreement between owner
and architect that clearly
communicates a project’s terms
and conditions, determine
responsibilities of each party and
set expectations for schedule and
payment for services.

4. Contract Basics

5. Contract Basics
• Why have a written contract?
– Mutual understanding
• Better understanding promotes better relationships
– Establishing your own rules
• Law will govern over silent issues
– Sizing up your client
• Understand your clients attitudes and motivations
– Identifying and allocating risk
• Candid discussion of risk fosters agreement between
parties

6. Contract Types
• Oral Agreements
• Letter Agreements
• Consultant-Drafted Agreements
• Client-Generated Agreements
• Professional Associations Standard
Agreements
• Continuing Service Agreements

7. Contract Basics
• First Comes the Proposal
– Following an initial meeting to discuss the basics of
the project, the architect will follow up with a Letter
of Proposal.
– a letter
– identifies each party
– location of the property involved
– brief description of the project
– scope of services to be performed
– proposed compensation structure
– a call-to-action for what’s next in the process

8. Contract Basics
• The Handshake
– simplest agreement
– Verbal
– no written documents!
– no legal contract
– no legal protection
– should be avoided at all costs!

9. Contract Basics
• Letter of Intent
– prepared by the architect
– forwarded to the owner
– thoroughly defines the services
– signed by the architect
– requires no signature or written confirmation
from the owner
– minimal legal protection
– followed up with more formal legal agreements

10. Contract Basics
• Letter of Agreement
– one or two page document outlining:
• the project description
• the basic terms and conditions of the agreement
• defined responsibilities for each party
• basic compensation structure
– prepared by the architect and signed by both
parties
– offers limited protection

11. Contract Basics
• Architect-Prepared Contract
– prepared in-house by the architect
– reviewed by an attorney
– more beneficial to the relationship between
owner and architect
– fully developed legal contract
– thoroughly developed terms and conditions
– provides adequate legal protection for both
parties

12. Contract Basics
• Contract Documents
– legal documents prepared by architectural
profession organizations
– very formal legal format
– very formal legal format of the documents may be
intimidating to some residential and small
commercial clients, often resulting in additional
review by the owner’s attorney

13. Contract Basics
• Elements of a Contract
– Agreement - offer is accepted
– Consideration - the inducement or motive
– Legal form - neither illegal nor against public
policy
– Competent parties - legal age, mentally competent
and have authority
– Legal purpose

19. Project Delivery Methods

20. Project Delivery Methods
• Traditional Methods
– Design-Bid-Build
• Traditional form of project delivery characterized by its
three phases, dual contracts and linear sequencing of
the work.
– Negotiated Design Team
• Sometimes referred to as design-assist, it brings the
contractor into the design process.

21. Project Delivery Methods
• Construction Management
– Construction Manager as Advisor
• A construction manager is brought to the design team
who acts as advisor to the owner.
– Construction Manager as Agent
• The construction manager is given the authority to act
on the owner’s behalf.
– Construction Manager as Constructor
• The construction manager is hired to act as project
coordinator and general contractor.

22. Project Delivery Methods
• Design-Build
– Design-Build
• Single point of responsibility for the project.
– Design-Build as Developer
• Design-build entity takes on some responsibilities of
real estate development.

23. Methods of Compensation

24. Methods of Compensation
• Time-based Methods
– Multiple of Direct Salary Expense
– Multiple of Direct Personnel Expense
– Professional Fee plus Expenses
– Hourly Billing Rates
• Other Methods
– Stipulated Sum
– Percentage of the Cost of the Work
– Square Footage, Unit Cost, Royalty

25. Design Contract Administration
• Agreements influence internal methods of
contract document preparation
– Bidding and Negotiating
– Fast-track projects
– Specifications and drawings
– Multiple prime contracts
– Work by owner

26. Construction Contract Administration
• Agreements influence construction
administration duties
– Lump sum vs. cost plus (with or without
guaranteed maximum price)
– Construction observation responsibilities
– Division of responsibility with construction
administrator
– Payment schedules and procedures
– Project closeout requirements

27. END