Cost of Construction

As someone that directs and designs building projects, clients often assume that I will be able to provide them an accurate and up front price to have their project built. However, it's not always easy to estimate - project price is affected by any number of factors and the combined matrix of these factors determine the ultimate cost, the primary being that I ultimately don't build the project, contractors do! In general, there are a few givens that will always affect the price of a project:

  • Location - different geographies, building codes, and economies affect costs
  • Size and complexity - will a contractor need multiple subs? is the scale and shape of the design complex? will new construction marry up to old construction?
  • Quality - is time important? materials? etc.

Architects may have an idea of a range of Construction Cost, but no rule of thumb can determine actually cost.  There is however one certainty about construction costs: owner(s) don't accurately anticipate the true cost of construction and are often surprised that their project is going to cost what the number(s) come in at.  Owners planning on building a custom house, building an addition, or renovating their existing home in New England should expect estimates to be an average of $200+ SF; and it can be upwards of $300 SF depending on location, topography, desired features, materials, size, etc.

In my previous blog:  A Fee Based Expertise, I wrote about the way in which an Architect structures their compensation. This blog elaborates on how that relates to the Cost of Construction.  An Architect may base their fee on the Range of Construction Cost based on their better knowledge of construction costs.  For the Architect to have an understanding of what their fees should be, they may conduct their own guesstimate of what they believe the cost of construction will be based on standard Basic Services, past projects, and the knowledge of specific project needs.

On Residential projects in New England, it is common for Architectural fees to run between 8 and 15 percent of the cost of construction. The range in percentage has to do with the specifics of the project and the quality and level of services offered.  A smaller percentage reflects the minimum requirements to obtain a building permit while the larger percentage reflects full architectural services and a robust drawing set required to build the ideal project with fewer surprise costs during construction.  

The best approach for a homeowner is to first know how much they can spend, and then discuss their budget with the Architect. This will sever as the limiting factor for size, materials, customization, etc.  When preparing for a realistic cost of construction, owners should understand that architectural services are an important and vital component of the total design project budget and just like how construction cost are determined by a matrix of factors so too are architectural fees.

A Fee Based Expertise

There was a time when The American Institute of Architects (AIA) actually published a recommended fee schedule.  However, in 1990, the Department of Justice won a lawsuit where the AIA was to withdraw these recommendations and could in no way, directly or indirectly, restrain the way architects charge for services. Therefore, no real standard drives Architectural pricing which can pose a challenge for both Clients and Architects.  For Clients, it is common to select the lowest bidder and that can have costly downsides.  For Architects, it can be hard to successfully convey the value of their expertise.  

Rather than being paid for expertise, as some doctors or lawyers are, Architects are thought to be compensated for an object – a Drawing Set.  As mentioned in Beyond the Drawings, services provided by an Architect are so much more than just a set of drawings.  According to the National Council of Architectural Review Board (NCARB), it takes about 13 years for the average architect to complete school, solidify practice hours (Intern Development Program), and pass the seven required exams to secure their license.  After completing such steps, it is assumed they have developed skills and knowledge of great value to clients and should charge accordingly for professional services.  This expertise is what it comes down to thus a client pays an Architect for the hours it takes to design and document each unique project created for each individual client. 

While an architects' fees are an additional project cost, hiring an architect can actually save you money in many ways. Beyond the value of their expert professional knowledge of the industry, codes, and local by-laws (that fuel an in-depth and successful design project) Architects can monitor your budget, propose designs that reduce energy costs, and provide design and planning solutions that function efficiently. They can turn a difficult lot into a successful building site, and fully develop a project to avoid changes once construction is underway.

An architect's compensation can be based on time and/or a fixed fee.  It is typical to perform architectural services on an hourly basis, with estimated costs depending on client’s requested levels of service, anticipated project scope of work, and town/city requirements.  A hybrid fee that combines both an hourly fee and a fixed fee based on the individual phases throughout the entire project typically works best for both the Client and the Architect. 

It is best for an Architect to understand the scope of a project and the Client's budget in order to create a fee that makes the most sense for each specific project.  There should be a clear understanding of the scope of the work and a custom fee created to reflect that work.  It is reasonable that fees have a proportionate relationship to the cost of the project.  It is common in residential projects, especially additions or renovations, for fees to reflect a baseline of work.  This is due to the fact that there is a minimum amount of time required to document, design, permit, and coordinate the project; whether the project is a 300 SF mudroom or a 1,000 SF master bedroom and bath. 

A Registered Architect who believes in providing a high quality of service is able to keep fees in proportion to the project scope while working with the Client to meet the standard requirements that comes with every design project.  An Architect brings a valuable expertise to every project that strengthens the success of that project.