Architects' Guide to Fee Bidding

177 Pages·2002·2.35 MB·English

by  M. Paul Nicholson

Architects’ Guide to Fee Bidding
Fee bidding still generates emotive reactions from within many sections of the
architectural profession. Fee bidding is not taught in most schools of architecture,
so practitioners generally rely on hunches and guesswork. It is these wild card
guesses that exacerbate the poor levels of income for which the architectural
profession is renowned.
This book introduces practising architects, architectural managers and senior
students, to the philosophy and practice of analytical estimating for fees. By
means of a detailed case study it illustrates the many problems that may be
encountered in the calculation of fees for professional services. It gives a step-by-
step guide through the complexities of fee bidding and acts as a source of
reference to successful bidding. A detailed discussion of the philosophy of design
management and architectural management is developed as a backdrop to the
preparation of a bid. It leads the reader through the mysteries of converting the
calculation of a bid into a serious tender.
This unique text is an essential guide for all practitioners, particularly those at
the commencement of their careers and Part 3 students. It will be of importance
to all construction professionals who operate within a highly competitive market.

M.Paul Nicholson MSc,PhD,MCIArbhas had a wide and varied career in
the construction industry, including running his own business, where his experi-
ence encompassed all types of buildings. He has been closely involved in the
innovative Masters course in Architectural Briefing at the University of Sheffield,
the MSc in Construction Procurement at Nottingham Trent University, and the
unique MA course in Architectural Management at the University of Nottingham.
Dr Nicholson is a Visiting Professor who lectures at universities in many parts of
the world, and continues to develop Architectural Management within the archi-
tectural and construction professions.

Architects’ Guide
to Fee Bidding
M. Paul Nicholson

London and New York
First published 2003
by Spon Press
11 New Fetter Lane, London EC4P 4EE
Simultaneously published in the USA and Canada
by Routledge
29 West 35th Street, New York, NY 10001
This edition published in the Taylor & Francis e-Library, 2005.
“To purchase your own copy of this or any of Taylor & Francis or Routledge’s
collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.”
Spon Press is an imprint of the Taylor & Francis Group
© 2003 M. Paul Nicholson
All rights reserved. No part of this book may be reprinted or
reproduced or utilised in any form or by any electronic,
mechanical, or other means, now known or hereafter
invented, including photocopying and recording, or in any
information storage or retrieval system, without permission in
writing from the publishers.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Nicholson, M. P. (M. Paul), 1935–
Architects’guide to fee bidding / M. Paul Nicholson.

p. cm.
Includes bibliographical references and index.
1. Architects – Fees. 2. Architectural contracts– Estimates.
3. Letting of contracts. I. Title.
NA1996 .N53 2002
720′.68′1 – dc21 2002070710
ISBN 0-203-99497-3(cid:13)(cid:10)(cid:13)(cid:10) Master e-book ISBN
ISBN 0–415–27335–8 (hbk)
ISBN 0–415–27336–6 (pbk)
Contents
Preface ix
Acknowledgements xi
Introduction xiii
PART I – COMMERCIAL PROFESSIONALISM
Competition is good for you 3
Design 9
Design communication 9
Design management 11
Design management: its position within the firm 12
Design as problem solving 12
Architectural design management 14
Management 15

Management structure 15
Management culture 15
Managing design 16
Architectural management 17
Variety of procurement routes 21
Design and build 23
Design and build market 23
Design-led and build 27
Division of risks 28
Risks and responsibilities 31
Contracts in current use 32
Brooks method of architect selection 33
vi Contents
Bids and fees 35
To bid or not to bid 35
Basis for bidding 36
Professional indemnity insurance 37
Fee tendering by architects 37
Fee-bidding circle 40
Estimating architects’fees 44
Discussion of the results 46
Fees and finances 48
State of the art 49
Estimating method 51
PART II – WORKED EXAMPLES
A The probable building cost 55
Introduction 56
Methodology 56
Precedent studies (Method 1) 58
Preliminary estimate from Spon’s price book (Method 2) 60
Preliminary estimate from a chartered quantity surveyor (Method 3) 61
Building Cost Information Service (BCIS) quarterly review figures
(Method 4) 62
Landscaping and external works (Spon’s) 68
Additional cost factors affecting the total contract value 68
Estimated value of the building contract 69
Statutory approval costs for client information 70

B Calculating the fees – ad valorem 73
Introduction 74
Methodology 74
RIBA indicative percentage fee scales (Method 1) 74
Spon’s indicative fee scale (Method 2) 78
C Analytical estimating of fees 81
Introduction 82
Methodology 83
Estimates of office costs 83
Schedule of accommodation 90
Drawing schedule and additional workstage requirements 95
Additional factors 110
Cost calculation for estimate ‘C’: preliminary estimate 112
Contents vii
Cost calculation for estimate: final estimate 113
Summary of results 117
D Analysis and conclusions 119
Introduction 120
Methodology 120
Summary of calculations 122
Analysis of the practice status 123
Analysis of the project 127
Analysis of external competition 127
Additional factors to convert the estimate into a fee-bid tender 130
Final summary 131
PART III – THE TENDER TRAP
Stage payments 137
Risk management 139
A final caution 144
Procurement routes affect fees 144
Value for money 145
Appendix 147
References 155
Index 161

Preface
It was while undertaking the research for this book that one very senior archi-
tect was interviewed. He proudly admitted to being 100 years old and that he
had been a practising architect all of his working life. The interview went well
until fee bidding was mentioned. This subject was anathema to him, for he
strongly believed that all architects should work to the scale of fees and that
competition by standards of service and quality of architecture should be the
only criteria for proper competition.
In an article in the Architect’s Journal(AJ) on 21 June 2001, Clive Walker sug-
gested that architects could face fines or even gaol for anticompetitive practices.
He was referring to the government’s statement entitled ‘Enterprise for All –
The Challenge for the Next Parliament’, which proposed that architects should
be exempt from competition laws. Under these proposals, the government aims
to eliminate price rigging and enhance service quality across all professions.
Previously, Robert Booth in a similar article in the AJ (8 March 2001) stated
that the ‘RIBA claims that the indicative fee scales are not used for anti-
competitive price fixing.’Quoting John Vickers, Head of the Office of Fair Trading
(OFT), Booth wrote, ‘My feeling, very much, is that the principles of competi-

tion and application of competition law should be the same across the board.’
No doubt, this argument of competition and forms of competition will rage on
for a considerable time. The lowest price is rarely the cheapest job, and com-
petition by price alone can only lower the quality of architectural services and
fee incomes. If architects can change their image from being service providers
to adding value to designs, then salaries within the profession could become
more realistic.
This book, being the first within the subject of architects’fee bidding, is, by its
nature, experimental. No doubt, architects may differ in their approaches to fee
bidding and the use to which they use the calculations. The author will be
pleased to receive correspondence that may prove helpful in the production of
further editions of this book.
M. Paul Nicholson
Alverton, Nottinghamshire, 2001