Technology in Architectural Practice

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The AIA Technology in Architectural Practice Knowledge Community (TAP) serves as a resource for AIA members, the profession, and the public in the deployment of computer technology in the practice of architecture. TAP leaders monitor the development of computer technology and its impact on architecture practice and the entire building life cycle, including design, construction, facility management, and retirement or reuse.


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Technology Cost pass thru to Clients

  • 1.  Technology Cost pass thru to Clients

    Posted 10-07-2017 11:58
    Unlike Contractors, Architectural firms do not directly pass on overhead costs to our clients.  We are interested in knowing if any firms have been discussing or are currently passing on any technology costs to their clients, via contract amendments or other means.  It seems with the increasing expenses for software subscriptions and hardware becoming obsolete within the lifetime of most design projects (1-2 years) that this could be an area where a client may bear the cost of depreciation for use of these items?  Any thoughts would be much appreciated?

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    Mitchell Harding AIA
    Garland TX
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  • 2.  RE: Technology Cost pass thru to Clients

    Posted 10-09-2017 18:22
    A contractor would not usually pass on overhead costs to clients sporadically, yet every business passes on overhead cost in their rate, tender or quote.  There is a lot of literature online about never selling on price, always sell on value, the best way to demonstrate value is 3D models and VR walkthroughs, not 2D plans and obviously, you would charge for the service at a premium while the technology is new.  Yes, there is a cost associated with this, yet it should be covered in your extra service fees?
    What type of output are you delivering to your clients? If I know more, I may be able to assist or tell you what we do to woo clients increase revenue and ultimately profit.Its one thing to enjoy your work it is better to make money doing something you enjoy.  :-)

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    Andrew Dwight
    Designer/BIM manager AAD Build
    BDM RubySketch
    Sydney Australia
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  • 3.  RE: Technology Cost pass thru to Clients

    Posted 10-09-2017 19:10
    Back in the day, like the Early '80s (1980s to be clear) as the profession was beginning to explore the use of technology many firms utilized a surcharge to fund their explorations. At that time the costs were proportionally higher than today for much less power, think original McIntosh relative to your iPhone. The results of technology far more speculative as to their benefits to deliver greater speed, efficiency, communications or collaboration then we know is possible today. In the larger firms where I was working there was some ability to leverage their larger corporate clients to accept these surcharges. Often firms offered to use CAD rather than hand drafting as an option that was accompanied by the surcharge.

    It wasn't long, perhaps 5 years or so, before clients began to question such surcharges. They began to understand the advantages to architects using CAD over hand drafting but not any advantage to them. Especially when it cost them more. Even clients who had been accepting the technology surcharge began to question it. In short order clients would hear the offer of hand drafting or CAD with a surcharge and turn it back to the firms to decided how they wished to prepare the documents. "CAD or drafting, we don't really care how you do it but we aren't paying any more. Just meet the schedule and fee." became their common response.

    At that point client's saw technology investments as our cost of doing business, it was overhead like rent. Their RFPs / RFQs changed to require CAD, as they now require BIM, for the preparation of the project documents. To compete for projects we were required to integrate the technology costs and work more efficiently using those technologies. That is a trend that remains with us today.

    While I applaud you for trying to think of ways to address the ever rising costs of technology my experience says a surcharge won't be a productive course. Understanding how to use technology to multiple your productively seems to be the best way forward.

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    RK Stewart FAIA
    Founder
    RK Stewart Consultants
    Salt Lake City UT
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  • 4.  RE: Technology Cost pass thru to Clients

    Posted 10-09-2017 19:58
    Hi Mitchell:
    Older AIA contract documents used to list technology costs as a reimbursable, so the practice used to occur. We don't, and I am not aware of others who do. What we are actually doing more and more is baking reimbursables into our billing rate. At a certain point, reimbursables become too costly to track. The comparison with general contractors is interesting. I had a conversation just today with contractor who said he uses relatively low billing rates and a relatively high mark-up, while other contractors appear to have a low mark-up but they pack a lot of overhead costs into their billing rates. So it's really how you want to slice and dice it: what the market will like, what you feel comfortable with.

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    Mike Sealander, AIA
    Maine Licensed Architect
    cell 207.266.5822