Architectural Fee

Based on B101, if the architectural compensation method is the percentage of the cost of the work. When the change order amount is added to the original cost of the work, Will the architectural fee change accordingly? Or the architect is still paid based on the awarded bid amount? Thank you! Haifeng

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@coachdarionziegler do you mind helping @hliu18 ?!

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Hi Haifeng,

This is a great question! The ambiguity around what exactly the architect should tie their fee to when basis is a percentage of the cost of work is something that the AIA has been working to address.

Older B101’s tied the fee to the ‘cost of work’. This resulted in the architect estimating the cost of work and billing the client based on those estimates. Then, at the completion of construction the actual cost was compared to the estimates the architect billed on, sometimes resulting in the architect requesting additional sums from the owner or vice versa.

The B101-2017 revised this language for the architect’s fee based on a percentage to be tied to the owner’s budget, in lieu of the cost of work. See snippet of the contract below:
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I found this great article the AIA put out about it. I think this article does a better job than I can describing this: https://www.aia.org/articles/202726-calculating-the-architects-fee-is-there-a-b

Mike Kroger, manager & counsel of AIA Contract Documents, states in this article,
" For example, B101-2017 clarifies that once the owner makes a progress payment to the architect, it cannot be adjusted based on subsequent increases or decreases in the owner’s budget. Thus, if the project begins with a $100 million-dollar budget, which escalates to $120 million dollars during the design development phase, the architect cannot request 20 percent more fee for its schematic design billings. The architect can, however, seek compensation as an additional service if that budget escalation was due to a material change in the project or one of the other reasons listed in Article 4 of B101-2017."

So, if you are using B101-2017, you are more likely to be compensated based on a percentage of the owner’s budget, in which case you can read through B101 to confirm when the architect may be awarded additional fee for services. Per the B101-2017, even if the owner’s budget is adjusted after contract signing the architects compensation for work already completed and billed for shall not be adjusted.

If you are truly being compensated by a percentage of the cost of construction, then there is likely to be some sort of reckoning at the end of the project where the fee billed is evaluated versus the actual costs.

If you want to read more about this I would click around the aiacontracts.org website or check out The Architect’s Handbook of Professional Practice page 966. The AHPP speaks about the original practice of billing per percentage of construction costs, not the owner’s budget as described in B101-2017.

Hope this helps!
-Darion

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Thank you, Darion! Super helpful! Haifeng

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