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Fee structure for house plans that will be used for a 300 home development.

  • 1.  Fee structure for house plans that will be used for a 300 home development.

    Posted 04-04-2019 18:15
    How do you establish a fee structure for the design of 5 single family homes that will be built 70 to 80 times each for a large development?
    License fee, use fee???

    ------------------------------
    J. Mark Barry AIA, NCARB
    Architect/Owner
    Barry Bull Ballas Design, Inc.
    Dallas TX
    ------------------------------


  • 2.  RE: Fee structure for house plans that will be used for a 300 home development.

    Posted 04-05-2019 18:13
    For those of you who aren't old enough to remember the Justice Department Consent Decree (that we had to read at each AIA Chapter meeting for 10 years in the 90's) this is something that we SHOULD NOT be discussing.
    Sorry, but you've got to figure this one out bu yourself.
    Cheers,

    Carl J. Handman, AIA
    A      R      C      H      I      T      E      C      T       
    98 East Walnut Street  Kingston, PA 18704      

    P: 570-287-1717               F: 570-287-7368                        





  • 3.  RE: Fee structure for house plans that will be used for a 300 home development.

    Posted 04-08-2019 10:09

    I'm not sure if you are concerned about the price-fixing issue, but discussion of the structure of fees does not constitute price-fixing.  If I were to say that I charge hourly, and another architect says they charge flat-fee, our discussion is not price-fixing.  If I tell someone my hourly billing rate, I've made it public knowledge.  There has to be an element of agreement or collusion between parties, tacit or explicit, of fixing a certain price, with the intention of controlling the market.

    I don't work on multiple-house developments, but I'd be very curious to know how an architect structures that fee - even if they never tell me the actual dollar amount.

    Just my two cents.



    ------------------------------
    Robert Braddock AIA
    Principal
    Red House Architects, PLLC
    Arlington VA
    ------------------------------



  • 4.  RE: Fee structure for house plans that will be used for a 300 home development.

    Posted 04-08-2019 10:35
    Thank you to all that have replied. I too only design single family homes, so this is a first for my firm. Appreciate all of your responses!

    J. Mark Barry AIA NCARB
    Sent from my iPhone




  • 5.  RE: Fee structure for house plans that will be used for a 300 home development.

    Posted 04-08-2019 10:41
    Robert,
    You are correct. So long as actual fees amounts aren't discussed, this conversation is okay.

    Carl J. Handman, AIA
    A      R      C      H      I      T      E      C      T       
    98 East Walnut Street  Kingston, PA 18704      

    P: 570-287-1717               F: 570-287-7368                        





  • 6.  RE: Fee structure for house plans that will be used for a 300 home development.

    Posted 04-08-2019 18:00
    Two terrific responses. Thomas's caution illustrates why some sort of additional fee for each unit built is justified. Carl reminds us all why this forum isn't the place for a more specific discussion of fee structures. You'll have to get advice the old-fashioned way - by calling up a few of your colleagues and asking them. Better yet - take 'em to lunch. 
    Good luck with your proposal!

    Carol De Tine AIA
    Maine Licensed Architect

    Carriage House Studio Architects LLC
    144 Vaughan Street
    Portland Maine 04102
    207 318 0731








  • 7.  RE: Fee structure for house plans that will be used for a 300 home development.

    Posted 04-08-2019 18:42
    Instead of discussing a fee structure directly. Could we discuss the issues involved in choosing a fee or the pros and cons of a reuse fee? There are people of experience in this group that could be enlightening to help avoid mistakes. Maybe there is a base fee for each plan when purchasing the property as there would for a realtor and a modification fee as needed. A lot could be said without mentioning a specific fee or percentage.


    Thank you,

    Todd Oeftger
    269-830-7088 cell






  • 8.  RE: Fee structure for house plans that will be used for a 300 home development.

    Posted 04-08-2019 20:15

    Pursuant to Todds  suggestion, a base fee for each property when sold is a good idea. That would be fair to the Architect. The only problem that I see is: the Architect is hired by a client – usually the developer, sometimes the builder, almost never the realtor.

     

    If the Architect proposes an Agreement with the Client ( developer or builder) that the sales price of each unit must be stipulated with the realtor, do you really think that the realtor will have a line item in his worksheet for this stipulation ? I do not ( unless the Architect is in partnership relationship with the developer and builder so that should be an understanding right at the start). 

     

    If the developer has a line item for the architects royalty for each unit and if the developer stays true to such an agreement ( where Architect being just a consultant)   the realtor balks because that extra fee ( could be about $1000 per unit) seems to come out of the listing price / sales price, and if the listing price gets negotiated down, the Architect will be asked to take a percentage of the cut; most likely the realtor would simply ignore the Architects fee and not get the royalty at all.

     

    I think we do need to speak about specific fees and percentages, if only to apply a "realty" to the discussion, and not just have an "academic" theorizing. The people of experience ( having  done more than 3  or 5 of these types of projects/ fee structures) in this group could , I am sure, enlighten us. Having been at this for a lot of years, I may yet learn something I did not know, and I look forward to it.






  • 9.  RE: Fee structure for house plans that will be used for a 300 home development.

    Posted 04-09-2019 17:54
    We have began prototyping some plans for specific developer/builder clients, and the structure we are using is a $/SF for the prototype, and a reduced $/SF, about a third, for the reuse fee per dwelling. Our designs are not 300 units, much smaller infill scale.
    Our AHJ has a prototyping program which we are learning to take advantage of. The prototypes are good for the 3 year building code cycle, and there are site plan requirements for the individual building permits associated with each build.
    Changes to update the prototype after it has been issued are handled hourly, CA hourly, plus any engineering, printing, or other reimbursable expenses.

    Felix Ziga, AIA

    Sent from my iPhone




  • 10.  RE: Fee structure for house plans that will be used for a 300 home development.

    Posted 04-11-2019 10:56

    Group: Has anyone heard from our General Council? Last time I posted just a little note about Business 101 I got a rebuke from the council.

    Is anyone else old enough to recall the "consent decree?"

    We had to sign it back in the 1980s.

     

    John Dugger, AIA, MBA

     

     

     

    J S Dugger, AIA & Associates

    Phone: 978-618-3391

    Member American Institute of Architects

    jsdaia.com

     


    Virus-free. www.avg.com





  • 11.  RE: Fee structure for house plans that will be used for a 300 home development.

    Posted 04-12-2019 16:32
    Edited by Emma Tucker 04-15-2019 16:54

    Hi all - thanks for bringing this to our attention! Due to your concerns over where to draw the line, I asked our General Counsel to review this thread and provide some feedback:

    Any sharing of specific fee amounts is likely to be problematic for purposes of federal antitrust law.  In addition, discussions concerning fees – even without stating specific dollar amounts – can cause problems.  The General Counsel has been monitoring this discussion to help ensure that it remains within the boundaries fixed by applicable law. 

    If you have questions regarding whether or not something is appropriate to post, you can always run content past us at knowledgecommunities@aia.org, and we'll help you verify. 

    Happy Friday!


    Edit to add more info:
    @Robert T. Braddock AIA - Given a little more time, our General Counsel has been able to pull together a bit more information, including the guidelines you requested. I hope this helps!

    The Sherman Antitrust Act, dating back to 1890, prohibits "every contract, combination, or conspiracy in restraint of trade," subject to a variety of interpretations by the courts over the past 129 years.  Some actions are viewed as so inherently harmful to competition that they automatically violate the Sherman Act.  They are known as per se violations, and they include price-fixing.  An individual convicted of price-fixing (or otherwise found to have violated the Sherman Act) is subject to a fine of up to $1 million and imprisonment for up to 10 years. 

    The U.S. Department of Justice and the Federal Trade Commission (FTC) are specifically charged with enforcement of federal antitrust laws.  The FTC has noted that antitrust scrutiny may occur when competitors discuss the following topics (among others):

    • Present or future prices
    • Pricing policies
    • Promotions
    • Bids
    • Costs
    • Capacity
    • Terms or conditions of sale, including credit terms
    • Discounts
    • Identity of customers
    • Allocation of customers or sales areas
    • Production quotas
    • R&D plans

    You will note that discussing any of these subjects in a manner that might be viewed as anticompetitive by antitrust enforcers could be interpreted as part of a “combination” or “conspiracy in restraint of trade.”  The line between what can and can’t be discussed is often hard to define, and often counterintuitive to those who don’t practice antitrust law.  It is for that reason that we monitor discussions about price carefully, and guide the conversation away from dangerous territory. 

    I will add that the AIA’s concerns about antitrust subjects are founded in large measure on past experience.  The AIA was a named defendant in a private antitrust lawsuit in the 1970s (and did not prevail), and was the subject of Justice Department antitrust investigations in the 1970s and 1980s.  Long-time members will recall that, after the second investigation, the AIA was under court-ordered supervision on antitrust matters from 1990 to 2000. 

    For more information on the AIA’s antitrust compliance policy and guidelines on some of the things that might raise antitrust issues, please see the attached materials.  If anyone would like to discuss this subject further, please contact me at jstephens@aia.org or at (202)626-7379.

    Thank you. 


    The attached materials from Jay Stephens are uploaded in our library here - the Guidelines provides a quicker overview, while the Statement provides a more comprehensive understanding.

    ------------------------------
    Emma Tucker
    Manager, Knowledge Communities
    The American Institute of Architects
    Washington DC
    ------------------------------



  • 12.  RE: Fee structure for house plans that will be used for a 300 home development.

    Posted 04-12-2019 17:32

    Well, your General Counsel takes the "general" bit very seriously.  I think that keeping this discussion thread within the law will require a couple of specifics.  So, any discussion of fees - even without mentioning dollar amounts - can cause problems.  What problems?  What should be the limits of the discussion?  If I end this letter by saying that I normally charge a fixed fee for my work, have I broken the law?  Please share some specific guidelines from General Counsel.

    Thanks for any help you can give!



    ------------------------------
    Robert Braddock AIA
    Principal
    Red House Architects, PLLC
    Arlington VA
    ------------------------------



  • 13.  RE: Fee structure for house plans that will be used for a 300 home development.

    Posted 04-09-2019 17:55
    Dear CRANiacs -

    This is an odd discussion for CRAN, since we do custom residential architecture, not commercial multi-family or spec houses.
    Judith Wasserman AIA

    Bressack and Wasserman Architects
    751 Southampton Drive
    Palo Alto CA 94303 
    ph: 650 321-2871  
    fx:  650 321-1987 
    www.bressackandwasserman.com










  • 14.  RE: Fee structure for house plans that will be used for a 300 home development.

    Posted 04-09-2019 20:20
    I am both a licensed architect and licensed realtor in North Carolina. My firm has discussed how this could work with a number of developer and investors over time. We have included fee in the base development and lot price so each house is designed based on some criteria but the fee is part of the sale of the lot. We have also done reuse and found that it usually requires modification prior to each use so that should be taken into account. If the entire project is speculative and each home is going on a mass graded site then I would treat it as a single multi family development.

    It would be good if as an industry we could figure this out as it has potential to bring a better quality design to more people in an affordable way.


    ------------------------------
    Ryan Edwards AIA
    Architect / Owner
    Zipper Architecture, P.L.L.C.
    Burlington NC
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  • 15.  RE: Fee structure for house plans that will be used for a 300 home development.

    Posted 04-07-2019 08:33
    Edited by Thomas Bank 04-07-2019 08:33
    Just be sure to discuss the project with your insurance provider as well as a mistake built 70 or 80 times is going to be a much greater liability than a mistake built once.

    ------------------------------
    Thomas Bank AIA
    Principal Architect
    Simply Stated Architecture, P.C.
    Lemoyne PA
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