Background as brief as possible:

Architect hired for large project at a fee of 7% of cost (not capped). Architect plans based on $35,000,000 budget, ended up costing $50,000,000, so architect made an additional $1,050,000 for no additional work/effort.

During this project they have made several "errors" which will cost the customer a few additional hundred thousand if not $1 million to correct when all said and done.

In addition to the big project, they designed and managed a smaller 8 room project. This project was cut down to 4 rooms to "save money for the big project", was mismanaged, and delivered late. Although this project hasn't even been complete for 6 months, it has now been decided to add the 4 rooms that were originally stricken from the original project.

Many might say hire another architect, but let's assume we are stuck with the one we have. He wants $250,000 to design the four room addition that he likely already designed, and if he didn't already design would be 80% copy/paste from the work he just completed.

Would it be out of line to suggest that he perform this work at a substantial discount given his previous results?

This message has been edited. Last edited by: a1abdj,

Don't know what the best solution is now but you can always ask ore renegotiate as it were.
I would also say to have all of this figured out in advance in the contract, if possible.

A) Look at your contract.

B) Depending on the nature of the screw up, I think most professionals would eat the cost of their mistakes.

was the original budget and ending cost due to the fact that the costs changed because of market pricing, if so then while they gained additional revenue from the project, the contract was written as such.

What does the contract say about mitigating damages for errors and omissions by the Architect firm. Should have been language regarding charge backs and responsibility of the parties re errors.

You can always negotiate the fee on the 4 room addition, leverage the errors against them, however you wish.

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A) Look at your contract.

It's not my contract, and those who did sign the contract have no clue what they are doing, and likely never had competent counsel review it.

That said, this new proposal is a new contract. I honestly don't know why they are even using the same guy, but since they are I'd at least expect some concessions based on the previous work. We are dealing with people that have zero experience with anything construction related, and they are spending tax dollars, so you can see why these types of situations occur.

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B) Depending on the nature of the screw up, I think most professionals would eat the cost of their mistakes.

Ha! See above regarding tax dollars. As an example the new track and field at our new $80,000,000 high school (in a district with 1,800 students total at the moment), did not meet the current requirements of the state's athletic association we belong to. As such, we could not hold a track meet at the brand new track.

Since this was not "discovered" until after construction was mostly complete, they're going to have to build some new facilities outside of the track area. I'm sure we're well into 6 figures on this ooops alone.

And the only party paying for this mistake will be the tax payer. It will come out as a change order, which the district will approve and pay for.

I know that technically everything is negotiable, but realize that it's not always customary to negotiate. I suppose that's the crux of my question. Is it typical or atypical to negotiate architect fees?

I am on an as needed consulting gig for an 8 figure custom home. After we fired the first architect and contractor the Owner, on his own, found a new contractor who had a lot with plans to build a spec house on it. They entered into an “agreement” with the architect to make a few minor changes (adding 4 feet to the house and a third garage bay). I asked the Owner if he had any discussion on pricing from the architect and he said he didn’t think it could be that much given he drew the original plans.
He got a bill for $20,000 for work that should have taken less than 8 hours total. Needless to say he was furious! I told him at this point the best he can do is ask for an itemization of the billing…

NEVER AUTHORIZE WORK WITHOUT AT LEAST AN ESTIMATE IF NOT A CONTRACT!

To the OP, What is your role on the project and how much do you know about the backstory on why the building cost so much more?

As to your general question, yes architect's fees are negotiated all of the time. They are also not typically uncapped as a percentage of construction and I believe the language in the standard AIA contract is that it's a percentage of budgeted costs. Regardless, we typically charge lump sum fees because of this. Or hourly not to exceed.

I'm curious; what were the exact nature behind those "errors"? Depending upon the point of view, one team's interpretation may be that those implied mistakes may never have been part of the project's scope of work from the very start. Or if they were clearly spelled out and documented from the very beginning, it's still up to the client and/or its representatives to make damn certain that they are involved in the design portion of the process so such screwups and ommissions won't occur as the project progresses into contract documents and most importantly, into actual construction when any changes will definitely hurt the budget.

Seeing from an outsider's POV, it sounds like there may be enough fault and blame to pass around to almost everyone involved.

In my past career I've had to deal with my (un)fair share of clients who didn't have a firm idea and grasp of what they wanted or even needed. It is typically NOT a fun time, and definitely is a financial and resource drain on the firm that could've been put to better use on other projects. Moreover when changes are made, seldom if ever is it as simple as a mere 'cut-and-paste', even if it seems like a simple reversion back to an earlier design. Such changes affect multiple documents, potential permitting approvals, systems integration and of course the various subcontract design disciplines, all of which do not like performing such revisions pro bono (ask me how I know and how butt hurt it can get). What may seem like a simple modification to the layman usually involves many hours of labor and coordination on the inside across the ENTIRE design team, up to and often including the general contractor and his subs, all depending upon the severity and timing of such revisions.

For the kind of money involved a contract attorney should have been consulted or at a minimum someone who really knows how to write and enforce the terms of the contract. This way everything is clearly spelled out for all involved and if there are delays the appropriate party can have money deducted from their fee. With a sloppy or poorly written contract you might not have much recourse to not paying the architect his full fee so one good option is to get someone to review the contract and see what your options are. As far as asking for a discount or asking someone to work for free its probably and exercise in futility.

Anybody big enough to do a $35mil construction project almost certainly has someone on board who knows how to read and interpret an architectural contract and make good comments on it. OP's description that they don't have a clue as to what they're doing just sounds suspect to me, personally.

As an architect who does this every day, I kinda roll my eyes at some of the suggestions. Not because I believe OP is purposefully mischaracterizing, but because there is likely a whole other story behind everything that has happened. The number one thing that drives costs in construction and design is owner-driven changes. Over the last few years since COVID, pricing has been wonky and hard to predict from a design standpoint but the only thing a designer can go on is past projects, which may or may not be applicable because of the cost environment we're in.

Pricing exercises along the way are the best way to keep budgeting in-line but if this was a public project, they may have had a CM estimate it early on and then hard-bid it at the end, which can lead to some nasty surprises.

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Originally posted by a1abdj:
Architect plans based on $35,000,000 budget, ended up costing $50,000,000...

Yowch! $15M overrun/$35M budget = 42% cost-overrun. Are the reasons for that understood? This being the Post-COVID world, maybe the budget was drawn with pre-COVID numbers, and delivered into the Post-COVID inflationary mess we live in these days, and not on the architect.

Anyway, if an appreciable part of that turns to to have been disregard/mis-estimation of costs by the architect, then IMO it's time to shop around. In the real world, a client that does this amount of construction would be someone the architect would not want to tick off and lose future business.

Meaning - absent some other factor - considerable pressure could be brought to bear if the architect thought he'd lose your org as a client. (Given this appears to be a government project, though, if the architect's brother in law is a local congressman, all bets are off.)

A casual mention along the lines of, "Well, we'd like to go with you again but given the cost overrun on project A and the errors on project B, we are going to have to put it out to at least three other firms for bid" might get something broken loose.

Also, in the above for argument's sake, I'm taking at face value the mention in the OP that the errors were all on the architect. Real world is often quite grey, and there can be plenty of blame to spread around.

I have a feeling I know exactly what you’re are talking about. This is one reason why we found a local architect that lives and works in our community.

We put date guarantees in our most recent work. Granted, that was 7-8 years ago and things have changed in the construction industry, but I would think that would at least be considered. I would certainly hope legal counsel reviewed the contract. If so, and they didn’t put clauses in to protect the taxpayer/entity, then new legal representation should be investigated. If legal didn’t sign off, then those in charge should be held accountable. Hard part is getting people to listen…

You’re a little cryptic in your initial post so I don’t want to put out too much information that would tip your hand. IF these issues are strictly market (construction) related, meaning as a result of the current construction issues, then I can see and understand the overages. The question then becomes, when was this agreed upon? How was the project paid for (bond issue, tax levy, etc)? Were these construction issue/delays known at that time? Where I’m going with is, you have to consider the current construction climate when looking at these large projects. We will have saved over $2m by purchasing an existing building for a new program we are starting in less than 2 years. To build as new would have been at least $2m more than purchasing and doing a few minor changes to the interior.

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OP, What is your role on the project

Concerned tax payer.

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how much do you know about the backstory on why the building cost so much more?

I know all of the back story, as I was warning them about it from the beginning. In short, a school district budged $30 million for a new high school. Architect was hired, and said it needed to be $35 million. I'm looking at the plans and other school construction projects going on at the time and determined (a year before bid) that they would be $10 million short.

They sold tax payers on a $35 million dollar project, bond issues were passed, and with that year's worth of inflation the bid was $50 million (when I was telling them $45 a year prior).

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They are also not typically uncapped as a percentage of construction and I believe the language in the standard AIA contract is that it's a percentage of budgeted costs

"7% of the owner's budget for the cost of construction as calculated in accordance with section 11.6"

Architect was confident in $35M number, bids came in (just like I said the would) at $50M, and new budget is $50M. Architect was "planning" on 7% of $35M, and gets paid 7% of $50M for same work.

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Seeing from an outsider's POV, it sounds like there may be enough fault and blame to pass around to almost everyone involved.

I can assure you that is indeed the case.

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For the kind of money involved a contract attorney should have been consulted or at a minimum someone who really knows how to write and enforce the terms of the contract.

My gut feeling is that this never happened. "This is the standard contract, sign there" is what I'm feeling occurred. I just FOIA'd that exact question. I asked if they used an attorney to review the contracts, and if so their names and when they were hired.

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OP's description that they don't have a clue as to what they're doing just sounds suspect to me, personally.

Pick just about any topic, and that first sentence about sums it up.

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because there is likely a whole other story behind everything that has happened.

Probably an entire mixture of ignorance, ego, greed, deception, and who knows what else.

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but the only thing a designer can go on is past projects,

I used current projects and hit the dollar figure right on the nose. Yet a professional was $15 million short? I find that hard to believe, unless it was intentional......

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those in charge should be held accountable.

They should be, but it will never happen. The laws don't apply to them, policies don't apply to them, and rules certainly don't apply to them.

I’d file a claim and his professional E&O policy should cover the incompetence.

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I’d file a claim and his professional E&O policy should cover the incompetence.

Won't happen. Best I can hope for is to ask them if they would reduce their fee on the next project, which also likely won't happen. But at least I'll ask, and I'll be the only one asking.

It’s unacceptable that someone spent 8 figures of taxpayer money without council looking it over. I’d be looking to fill the chopping block.

Frank, has there been any transparency with regards to these issues from those involved to the tax payers? That includes elected officials and other decision makers that aren’t in elected positions.

I completely understand your concern with the project and applaud your efforts. However, I know a guy like you who thought he would get on the local small town govt. council and "get things done". Less than a year later he said F it and resigned. There was no changing this system. It was not worth his time and aggravation even trying to change the simplest things.

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Frank, has there been any transparency with regards to these issues from those involved to the tax payers? That includes elected officials and other decision makers that aren’t in elected positions.

Depends on your definition of transparency. The honest problem is that you have a group of people that I do believe have mostly good intentions, but virtually zero idea how these things work in the real world. As such, they are ripe for being taken advantage of.

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Less than a year later he said F it and resigned. There was no changing this system. It was not worth his time and aggravation even trying to change the simplest things.

If we don't make the effort, we're doomed. Everybody gets worked up over the national level elections, but the reality is that what happens here at home is what really impacts the majority of our day to day lives.

I've been at this for 3 years now, and I've had a number of small successes, but had another first tonight.

The owner of the architectural firm was at the meeting tonight. Although I'm in no position to negotiate dollar amounts with him, we did have a conversation. I stated my concerns when it comes to protecting tax payer dollars, and suggested a modification to his contract which he agreed to.

The contract is being changed from a flat fee amount to a lesser of the flat fee vs. 7% of the project cost.

If the project bids over (and we may already be spending $1M more today than we would have doing it all at once last year), we're protected with the flat fee. If the project bids under, we're protected by the 7%.

For the first time since I have been involved, the board tabled the matter to have their legal team review it prior to agreeing. Doesn't sound like much, but it's something that simply never happens, so I consider it a big win.

Wouldn't have happened if I hadn't taken the time to be involved.

Congrats on the win.

You did good