budgeting
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covers
developing an internal budget for the project including man / woman hour allocations for : administration, design, production, bidding, contract negotiation and construction administration as well as assigning billing rates and estimating consultant fees. This operation is closely tied to the fee assessment operation and will form the basis of time-lining the project. other benefits of a budget. 1. Establishes a production target for each phase of development 2. Establishes an approximate date of completion for each phase 3. Provides a comparison of estimated verses actual time spent 4. Provides a historical point of reference for budgeting similar projects in the future. The clip below provides an over-view of a budgeting spreadsheet used to estimate and track personnel hours for each phase of a project in the architectural office |
why is this important?Typically one of the first questions a potential client will ask is "how much are you going to charge me for this project?" Having a man/woman hour budget helps provide a baseline for answering this question while serving to address several other functions in the office.
one approach to budgeting A spreadsheet (Excel shown below) is one approach to developing a budget. In this particular example: 1. General Phases are grouped by Color 2. Specific tasks are defined under each Phase sub-heading. 3. Columns are based on team members each having unique billing rates. 4. 'EST' establishes estimated hours for that team member's task. 5. 'ACTUAL' establishes time actually spent on that task from time sheets 6. Team member columns are sub-totaled. 7. Phases are totaled. Ultimately the project is totaled and those hours are multiplied by the billing rates to determine the internal project cost, with billing rates being adjusted by the office multiplier to handle overhead costs. This does not represent the total project cost to the client however; since consultants costs must still be added as well as any required additional services. why do we dodge establishing a budget? As students of architecture, AIT's and young architects we are rarely exposed to this side of the practice and tend to abhor this tedious accounting process, instead opting for the more glamorous and engaging side of the practice, resulting in us jumping right into design. This is like being dropped right into the middle of a forest without a map and a start point. We love to hike (design) and just walk along lost in the trees. This is why a common practice of college architectural training; to design and redesign until the last minute, while it might be good for design exploration, it tends to create bad habits that can really make practicing architecture non-profitable. A word of warning!! : Neglecting this budgeting process and ignoring its targets throughout the project will most likely mean you will be working for about $2.50 an hour. The result of too much time spent on the various tasks because you ignored your completion targets. |
billing ratesBilling rates vary across the architectural office and are affected by two primary factors:
1. Salary: The individuals salary will determine there effective baseline billing rate. 2. Multiplier: The office multiplier is derived from the office overhead cost and is required to cover operating expenses due to: a. Staff salaries b. Staff benefits (healthcare, profit sharing, 401k's, etc) b. Office rent & utilities c. Building and Professional Liability Insurance d. Office supplies e. Misc expenses More In-Depth on the Multiplier from: .. No Left Turn - Notes from the Road The actual baseline billing rates and office multiplier will vary across differing architectural practices but the staff members generally fall into a hierarchical order for billing rates as follows: Prinicipal Architect / President (Highest) Principal Architect / VP or CEO Project Architect Specialist (L.E.E.D. / Interior Design / Spec Writer / B.I.M. Mngr) (I.T. Mngr / Accountant / Marketing) A.I.T. C.A.D. Operator Clerical Staff (Lowest) There are a number of surveys on billing rates available on line. Just be aware that local rates may vary from national / regional survey's 2011 Compensation Survey (a summary by Oscia) Setting Rates for a Firm (AIGA - Shel Perkins) |
estimating consultants feesThere are two trains of thought here.
The first is "Don't Estimate Their Fee - Get a Quote". In this scenario you are letting the market drive their fee and assuming they are going to give you the best price based on their availability and desire to do the work. Other factors that play into their pricing are going to be a. their previous experience working with you (good or bad), - personality, - ability to manage the project, - quality of your work, - ability to provide accurate and timely information, b. the difficulty of the projects you design, c. track record on paying invoices, This approach is often associated with getting competitive pricing from multiple consultants for the same work. --------------------------------------- The second is estimating their fee based on a percentage of either the architectural fee or of the estimated construction cost. This approach has to be sensitive to the building type, which may, require more work on the part of the consultant. With this approach the architect usually has selected the consultants based on the criteria referenced under item 'a' above and the consultants particular experience with the project type or client. The architect then negotiates with the consultants with a target fee in mind. Competitive pricing from multiple consultants does not usually occur in this approach. |
The Fee Estimating Spreadsheet is available through the A.I. Dropbox. The following clips are provided as an over-view to the operation of the spreadsheet.
Note: The spreadsheet is provided for free and in good faith, and while efforts have been made to reduce errors in the functionality there is not guarantee that the spreadsheet is defect free.
By downloading and using the Fee Estimating spreadsheet you indemnify and hold harmless all Architectural Intelligence owners, staff and contributors from all damages resulting from or contributable to its use.
Note: The spreadsheet is provided for free and in good faith, and while efforts have been made to reduce errors in the functionality there is not guarantee that the spreadsheet is defect free.
By downloading and using the Fee Estimating spreadsheet you indemnify and hold harmless all Architectural Intelligence owners, staff and contributors from all damages resulting from or contributable to its use.
