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Architects New Remuneration and Commensurate Professional Services: The Architects Duties and The Clients Rights

A paper delivered to the Lagos State Chapter of the Nigerian Institute of Architects

By

Arc. Roti Delano FNIA

25th March 2010

ARCHITECTS NEW REMUNERATION AND COMMENSURATE PROFESSIONAL SERVICES: THE ARCHITECTS DUTIES AND THE CLIENTS RIGHTS

Ladies & Gentlemen I am delighted to present this paper to the members of the Lagos State Chapter of the Nigerian Institute of Architects. The issue of fees and commensurate professional services viz-a-viz the architects duties and the clients rights is always a topical issue amongst the consultants in the building industry and can never be over discussed. It is even now more topical particularly with some of todays clients seeking consultancy services beyond Nigeria shores and always willing to pay the fees for those consultants which is always in excess of what the Nigerian counterpart will earn. We therefore need to ask ourselves why this situation has arisen. Is it that our clients who went to the same universities as ourselves studied under the same conditions are not confident about our services? Lets take a brief look at the fee structure as it was in the past. Fees Historical Background Prior to 1975, architects were earning between 6% 10% of the final contract sum in accordance with the RIBA rules which were applicable throughout the Commonwealth. At that time there were quite a number of foreign architects practicing in Nigeria. All the various professions in the building industry had their own scale of fees. However in the immediate post civil war era and with the oil boom, the Federal Government had a number of projects country wide and engaged a number of foreign firms particularly from the eastern bloc on a design and build basis. Some of the projects were Festac Village and FHA built by the Romanians, Trade Fair Complex by Energoproject, National Theatre and 1004 Housing Estate by the Bulgarians. These were the projects in Lagos which was then the capital of Nigeria. At this time the few Nigerian architects in private practice were also enjoying the boom and living a fast ostentatious life. Social grumblings commenced particularly by our other professional colleagues in the civil service. The engineers felt the architects were overpaid for not doing much. To make matters worse some architects in private practice were short changing the engineers and at times failed to pay them. In those days the ratio of payment was architect 6%, Structural Engineer 3%, mechanical and electrical 2% and quantity surveying 2%. There were a lot of complaints from our sister professionals who believed that the architect did not merit the fees. During this time the government was the biggest client in the country and was in a hurry to catch up with developed world after the civil war. The fight within the professionals was thereby affecting the civil service and in order to reverse the drift, the Military cabinet decided to regulate consultancy fees. This was the beginning of the Federal Fee Scale which was first produced in 1975. In 1978 the Federal Ministry of Works reviewed the 1975 document after various meetings with the NIA and suggested that the private sector may use the same agreement as used by the Ministry for the time being. This 1978 document had the architects fee starting at 4.5% for a project of N250,000.00 and sliding thereafter. This Scale was used for the next 14 years until 1992 when it was revised. In this revision, the starting band was increased from N250,000.00 to N5 Million. The starting percentage was also increased by 0.25% i.e. from 4.5% to 4.75%. In 1996, minor clarifications were made to the 1992 Scale but these clarifications did not affect the bands or the percentages. It is important to note that this 1996 Scale stated clearly that the fees were designed for use in the Public Sector as well as a guideline for employers in the Private Sector. This is the Scale in use to this day by most architects for works both in the public and private sectors. In recent years with the new technology and demands of the client, the 1996 Scale of Fees became no longer commensurate for the services demanded. The economy was becoming deregulated. The value of the Naira was depreciating. Costs of projects increased astronomically due to the

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ARCHITECTS NEW REMUNERATION AND COMMENSURATE PROFESSIONAL SERVICES: THE ARCHITECTS DUTIES AND THE CLIENTS RIGHTS

depreciation of the Naira. Private clients and in fact government were engaging foreign architects and were being paid fees far in excess of what the Nigerian architect will charge according to the 1996 Scale. The NIA decided that it was time to have a review of the Scale of Fees and a Committee was set up in 2005. Unfortunately this Committee did not conclude its assignment as no new or revised document has been produced. However the current NIA President set in motion another Committee to look at the existing 1996 Conditions of Engagement and Scope of Services with a view of producing an up-to-date document which will reflect the realities of consultancy services in todays age of rapid technological advancements. In the meantime, the Association of Consulting Architects Nigeria was inaugurated in 2005. One of the tasks the Association set for itself is the issue of professional fees and scope of service. A comparative study was made by this association of fees for Ghana, South Africa, Malaysia, UK, Australia and USA. It was interesting to discover that the Nigerian architect was amongst the least paid architect amongst the 16 countries whose scale were compared. After almost 2 years of study ACAN came out with its Conditions of Engagement and Scope of Services which was launched for use in September 2009. This document maintained the percentages in the Federal Fee Scale of 1996 but increased the bandwidths of the estimated construction costs. (See Appendix ). Architects fees Architects fees are a relatively small proportion of the total cost of a building project, but an architect can make a positive and often considerable contribution to a project both in terms of cost effectiveness and ultimate overall value. There has been a trend in recent years towards competitive tendering in connection with many aspects of building procurement, including the provision of professional services. Architects and indeed other Consultants are always prepared to negotiate fees and often do so, but it is important for clients to access the true quality and value of the professional service being offered and not just accept the lowest bid. Architects fees are usually calculated on a percentage or lump sum basis although some work may be time-charged by agreement. Expenses may be included within the agreed fee or charged separately. Percentage Basis This is the basis on which most architects calculate their fees. The Nigerian Institute of Architects have been using the 1996 Federal Government Scale of Fees for Works in the Public Sector also in the Private Sector even though the original document from the Ministry stated it is a guide for the Private Sector. The architects fees are expressed as a percentage of the total construction cost i.e. the cost as certified by the architect of all works, including site works executed under his direction. Before fees can be estimated, client and architect need to establish the services to be provided, the approximate construction budget and the nature of the works. Lump Sum Basis Lump sums are best used where the scope of work can be clearly defined from the outset. It is necessary to deprive the parameters of service i.e. time, project size and cost where applicable so that if these are varied by more than a stated amount, the lump sum itself may be varied.

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ARCHITECTS NEW REMUNERATION AND COMMENSURATE PROFESSIONAL SERVICES: THE ARCHITECTS DUTIES AND THE CLIENTS RIGHTS

Time charge basis This basis is best used where the scope of the work cannot be reasonably foreseen or where services cannot be related to the amount of construction. For example where the architects appointment is for reports and conservation work, fees could be on a time-charged basis. In this case, architect maintains records of time spent on services carried out and will make such records available to clients on reasonable request.

Payment of fees The current normal arrangement is for architects fees to be paid in accordance with the 3 stages i.e. on completion of each stage. Usually the stage 3 is paid upon the issuance of payment certificates to the contractor. However the Association of Consulting Architects has approved 6 milestone payments made up of 2 milestones per the current stages as follows: Stage 1 Conceptual Design Milestone 1 10% on issuance of letter of Commission and instruction to proceed the appraisal, programming and project definition. 15% for Conceptual Design with

Milestone 2

Stage 2 Construction Drawings Milestone 3 Milestone 4 20% for coordinated detail design. 30% for construction documents

Stage 3 Tender Process and Construction Services Milestone 5 25% for Bid Process through contract administration and inspection of the works to be paid in equal monthly instalments during the construction services. Milestone 6 Final payment being balance of any fees due at the final account.

Note that under Milestone 5, the monthly instalment shall be determined by the fees payable for Stage 3 based on the original construction period however should the construction extend beyond the original contract period, the architect and his team will continue to receive the monthly fee until completion of the works.

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ARCHITECTS NEW REMUNERATION AND COMMENSURATE PROFESSIONAL SERVICES: THE ARCHITECTS DUTIES AND THE CLIENTS RIGHTS

The Architects Duties Architects are the designers of the building project and have the difficult task of translating their clients ideas into an acceptable design and then into working drawings. They are qualified to design and administer the erection of buildings and must possess both theoretical and practical knowledge. Architecture is a science as well as an art, for it produces a structure as well as create a form and must combine aesthetic effect with practical considerations. The duties of the architect commences on his appointment. It is very important to wherever possible establish the fees during the early stages of the project since disputes during the course of a scheme can be destructive to consultant/client relationships. Architects must be careful not to give significant reductions in fees which in most cases are likely to lead to reductions in the level of service and/or quality although these may not immediately be apparent to the client. Architects have a professional duty to employ sound design practice and comply with those laws, regulations, codes and standards applicable to the project at the time the architect renders the service. The lists of duties universally accepted for the architect are as follows: 1. To advise and consult with the employer (not as a Lawyer) as to any limitation which may exist as to the use of the land to be built on either by restrictive covenants or by the rights of adjoining owners or the public over the land, or by statutes and by-laws affecting the works to be executed. 2. To examine the site, sub-soil and surroundings. 3. To consult with and advise the employer as to the proposed work. 4. To prepare sketch plans and a specification having regard to all the conditions which exist and to submit them to the employer for approval with an estimate of the probable cost if requested. 5. To elaborate and if necessary, modify or amend the sketch plans as he may be instructed and prepare working drawings and a specification or specifications. 6. To consult with and advice the employer on obtaining tenders, whether by invitation or by advertisement. 7. To supply the builder with copies of the contract drawings and specifications, supply such further drawings and give such instructions as may be necessary, inspect / supervise the work and see that the contractor performs the contract and advises the employer if he commits serious breach thereof. 8. To perform his duties to his employer as defined by any contract with his employer or by the contract with the builder and generally to act as the employers agent in all matters connected with the work and the contract except where otherwise prescribed by the contract with the builder as for instance in cases where he has under the contract to act as arbitrator or quasicontractor.

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ARCHITECTS NEW REMUNERATION AND COMMENSURATE PROFESSIONAL SERVICES: THE ARCHITECTS DUTIES AND THE CLIENTS RIGHTS

Architects must also have a good, practical knowledge of building and allied trades and must have at least a working knowledge of the more specialised aspects of building such as mechanical and electrical engineering services. Above all, they must be creative and dedicated to solving the clients problems as expressed in the brief. The Clients Rights The client is the Employer and has rights which include the following: 1. The client expects the architect to carry out his duties diligently with reasonable skill and care. 2. The Client has authority to issue instructions to the Architect, subject to the Architect's right of reasonable objection. 3. Ownership of drawings The ownership of copyright in drawings should be distinguished from ownership of the actual pieces of paper upon which they are drawn. It is settled Law that upon payment of the architects fee, the client is entitled to physical possession of all drawings prepared at his expense i.e. the paper. In the absence of agreement to the contrary, copyright remains with the architect who has a lien (right to withhold) on the drawings. However if all copyright is assigned to the client he i.e. the client may make such use of the design as he wishes. However architects should note that even if they have assigned the copyright, they may reproduce in a subsequent work part of their own original design provided that they do not repeat or imitate the main design. This allows the architect to repeat standard details which would otherwise pass to the client upon prior assignment of copyright. 4. Appointment of other Consultants Just as the client appointed the architect, he/she also has the right to appoint the subconsultants. 5. Choice of materials The client has a vision of what he is expecting and has the right to choose materials based on the architects advice. 6. Choice of Contractor The client is the employer and enters into an agreement with the Contractor. The client can choose the contractor based on advice from the architect. Conclusion As architects who have undergone rigorous studies of between 5 7 years study in the universities followed by a minimum of two years post graduation internship before seating for the professional examinations, we have the right to demand for fairer compensation for the work we do. The work environment has changed from the days of drawing boards and parallel motion to computers and softwares. The building fabric has changed with new products. The way and manner business is conducted has changed and this has to be reflected in designs. In asking for more fees we need to also give the commensurate services. Imagine that the estate agent who may have to sell a property you have just completed the construction after say 2 3 years of designing and construction period
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ARCHITECTS NEW REMUNERATION AND COMMENSURATE PROFESSIONAL SERVICES: THE ARCHITECTS DUTIES AND THE CLIENTS RIGHTS

now earns 5% of the sales price which includes the cost of the land and building for possibly a months work, whilst you earned less than 4.75% as an aggregate of the construction cost for over a period of 2 3 years. Similarly most other professionals outside the building industry dictate their fees in a deregulated manner, so why should the professionals in the building industry continue to have government regulated fees. We are already in a deregulated economy. Telecommunications is now deregulated. The media is deregulated. The Oil Industry is about to be deregulated with the Petroleum Industry Bill. The building industry also should be deregulated. We do not need the government to do this for us. The Federal Scale of Fees should be dropped completely and the NIA scale should be the operative scale for both the public and the private sectors. Already the Quantity Surveyors and Estate Agents have their Scales. The other professionals, lawyers and doctors decide what they want to earn. Finally while canvassing for new scale of fees from the Institute, we also need to look inwards at our duties and obligations to the client. Our deliverables need to be a lot more detailed. Designs need to be well resolved and construction drawings have to be well detailed such that the Quantity Surveyor can have all items measured rather than making provisions under prime cost and provisional sums. We also need to appreciate our value and the services we render by not giving unreasonable discounts on fees just to get the job. Light fees will make it difficult for practices to reinvest in information technology, CPD and quality systems all of which are ultimately essential for the level of service that can be provided to clients. If we can fulfil our professional obligations and duties to our clients, I am sure that clients will appreciate us more and fulfil their own obligations without asking for unreasonable discounts. Thank you. Arc Roti Delano President Association of Consulting Architects Nigeria
References: 1. 1992 paper to the NIA AGM in Ilorin, Kwara State with the title Regulated Fees in a Deregulated Economy by Arc. Fola Alade 2. The Architect in Practice. 9th Edition David Chappell & Andrew Willis.

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ARCHITECTS NEW REMUNERATION AND COMMENSURATE PROFESSIONAL SERVICES: THE ARCHITECTS DUTIES AND THE CLIENTS RIGHTS

APPENDIX SCALES OF FEES 1960 - 1975 NIA Scale based on RIBA sliding scale ranging between 10% - 6% of the Contract Sum. 1975 and 1978 Scale Up to 250,000.00 250,001 1,000,001 2,000,001 5,000,001 10,000,001 Over 20,000,000.00 4.50% 4.25 4.00 3.50 3.00 2.50 2.00

1,000,000.00 2,000,000.00 5,000,000.00 10,000,000.00 20,000,000.00

1992 and 1996 Scales Up to 5 Million Next 10 Million Next 15 Million Next 45 Million Next 75 Million Next 150 Million Next 200 Million Next 500 Million 4.75% 4.50 4.25 4.00 3.50 3.00 2.50 1.75

2009 ACAN Scale Up to Next Next Next Next Next Next Next 250 Million 500 Million 750 Million 2,250 Million 3,750 Million 7,500 Million 10,000 Million 25,000 Million 4.75% 4.50 4.25 4.00 3.50 3.00 2.50 1.75

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ARCHITECTS NEW REMUNERATION AND COMMENSURATE PROFESSIONAL SERVICES: THE ARCHITECTS DUTIES AND THE CLIENTS RIGHTS

APPENDIX - SCHEDULE OF WORLDWIDE FEES COMPARISON Consultancy Services Fees as a Percentage of Construction Cost Architect GHANA Architect fees dependent on cost of project EUROPE Belgium Denmark Finland France Germany Great Britain Greece Ireland Netherlands Portugal Spain Sweden Nigeria NORTH AMERICA Canada Mexico US ASIA Australia Japan New Zealand *Great Britain has deregulated fees completely. * US has no scale of fees but the architect at least earns 60% of the A/E fees *The Structural Engineers use a sliding scale that varies from 2.5% to 4.5% *For Mechanical and Electrical Services the range is from 2.2% to 4% depending on the cost of the services in the project. *The QS tend to use a sliding scale and these days tend to charge for project management. The figure quoted here is about the maximum. 8.00% *4.5% *4% *4% 8.00% Structural Engineer M&E Engineer QS/Cost Consultant Other Total Fee

8.00% 5.00% 4.00% 4.65% 6.50% 5.50% 3.00% 5.00% 5.50% 6.00% 8.00% 5.50% 4.50% 3.25% 5.00% 6.20%

0.05% 3.00% 2.50% 2.50% 3.90% 2.75% 1.50% 1.80% 1.20% 150% 2.40% 3.00% 1.25% 2.00%

1.00% 4.00% 1.60% 2.70% 3.25% 1.50% 1.65% 1.50% 2.00% 3.90% 3.90% 1.75% 2.50%

0.75% 0.40% 0.65% 1.50% 3.25% 1.00% 2.60% 0.50% 1.50% 1.25% 0.20% 2.75% 0.25% 1.00%

0.25%

0.50% 2.00%

1.50% 3.50% 1.70%

10.05% 12.00% 8.50% 8.30% 16.60% 14.75% 7.00% 11.05% 10.20% 14.50% 10.95% 12.00% 14.15% 6.75% 12.00%

0.25% 1.50%

3.75% 4.00% 4.50%

1.00% 1.35% 2.10%

1.50% 2.20% 2.20%

1.00% 1.35% 2.00%

0.85%

8.10% 8.90% 10.80%

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ARCHITECTS NEW REMUNERATION AND COMMENSURATE PROFESSIONAL SERVICES: THE ARCHITECTS DUTIES AND THE CLIENTS RIGHTS

Comparison of Scale of fees by South African Council for the Architectural Profession with NIA and ACAN Scales
1.0 ZAR 20.27 NGN Exchange=rate : 1ZAR = N20.27

Cost Bracket 1 2 3 4 5 6 7 8 9 10 11 12

Recommended scale of fees for Professional Architectural Services Cost of Project (excl VAT) Fee (excl VAT) (Base + percentage of Project Cost ) R 1 to R 300,000 N6,000,000 R + 12.50% R 300,001 to R 600,000 (N6,000,000 12,000,000) R 7,500 + 10.00% R 600,001 to R 1,200,000 (12,000,000 24,000,000) R 22,500 + 7.50% R 1,200,001 to R 2,400,000 (24,000,000 48,000,000 R 25,500 + 7.25% R 2,400,001 to R 4,800,000 (48,000,000 96,000,000 R 31,500 + 7.00% R 4,800,001 to R 9,600,000 (96,000,000 192,000,000 R 43,500 + 6.75% R 9,600,001 to R 19,200,000 (192,000,000 -384,000,000 R 67,500 + 6.50% R 19,200,001 to R 38,400,000 (384,000,000- 768,000,000 R 115,500 + 6.25% R 38,400,001 to R 76,800,000 (768,000,000 1,536,000,000 R 211,500 + 6.00% R 76,800,001 to R 153,600,000 (1,536,000,000 -3,072,000,000 R 403,500 + 5.75% R 153,600,001 to R 307,200,000 (3,072,000,000 6,144,000,000 R 787,500 + 5.50% R 307,200,001 + (6,144,000,000 5.75%

Note :The highlighted row is where the ACAN scale starts from at 4.75% of cost of Project

The NIA 1996 scale starts at 4.5% for Estimated Cost of N5.0 million whilst the South African scale starts at 12.50% for the equivalent Estimated Cost of N6.0 million.

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