The Design Process:
Most of our projects involve 4 phases; pre-design, schematic design, design development and construction documents. We provide preliminary cost estimating as part of our architectural services, usually at the end of schematic design. If our client is interested in having us build their project, we encourage them to make that decision after we provide the preliminary estimate. If the client wishes to use a competitive bidding process to select a builder, we then continue as the architect and advise and advocate for the client throughout the design and bidding process.
Over the years we have transitioned from a “fixed fee” or “lump sum” fee structure for architectural services, to billing hourly based on an estimated range of expected fees for each phase of the work. As the amount of design time required for each project can vary greatly, depending on many factors, we ultimately found ourselves charging too little for the more complex projects and too much for the projects that come together very quickly. The obvious pitfall of this methodology is that the majority of the clients with less complex projects end up footing the bill for the rest. Most people, when presented with the option, would instinctively say they prefer a “fixed” price for every purchase they make. But, when presented with a proposal that defines the phases and presents a range of fees for each phase, they are immediately on board because it becomes real and they know they will get to see where their money is going.
The Construction Process:
If Kraus Associates is enlisted for architectural services only, we will continue to advise and advocate for the client until construction has been completed and the client occupies the project.
If the client has chosen to have Kraus Associates transition into the construction process as the builder for the project, we then bring the preliminary estimating into our construction accounting software and begin the completely transparent process of managing the construction to completion. Our billing structure for construction management services, much like our architectural services, is based on actual cost of subcontractor and material costs plus a fixed percentage for overhead and profit. To maintain complete accuracy, all transactions in the construction process are entered into the construction accounting software as well as into a formula-driven spreadsheet, so there is a continuous cross-checking of every transaction. All of this information is presented on a bi-weekly basis with each invoice, so the client has all of the information at hand, should they choose to “drill down” into the numbers. We find that our clients overwhelmingly prefer this process to the fixed-price / change order scenario, in which there is a constant disconnect and tension.