STANDARD OF CARE A STAFFING PLAN - Sample Chart

Level of skill and diligence that a person reasonably prudent architect 1 Multiplier = 3.2 Salary Hours/Year Hourly Rate % Charged Chargeable Hours Direct Salary Expense (DSE) Billable Revenue Indirect Salary

DO NOT DISTRIBUTE
Cost-Plus WITHOUT Upset
Stipulated or Lump Sum
would exercise in the same community, time frame, given same or similar 2 Principal $ 120,000 2,080 $ 57.69 65% 1352 $ 78,000 $ 249,600 $ 42,000

% of Construction Cost
Cost-Plus WITH Upset
facts or set of circumstances. 3 Project Architect $ 82,000 2,080 $ 39.42 75% 1560 $ 61,500 $ 196,800 $ 20,500
INSTRUMENTS OF SERVICE 4 CAD Technician 1 $ 55,000 2,080 $ 26.44 90% 1872 $ 49,500 $ 158,400 $ 5,500
Drawings, specs, and other documents prepared by the architect as part 5 CAD Technician 2 $ 50,000 2,080 $ 24.04 90% 1872 $ 45,000 $ 144,000 $ 5,000

Unit Costs
of providing services under the owner-architect agreement, and are 6 Administrative Assistant $ 41,000 2,080 $ 19.71 18% 374 $ 7,380 $ 23,616 $ 33,620
OWNED BY THE ARCHITECT, and can be in any medium- sketches, outline 7 TOTAL A $ 348,000 B $ 241,380 C $ 772,416 D $ 106,620
specs, studies, analyses, models, renderings, etc. B OVERHEAD EXPENSES - Sample Chart C OVERHEAD RATE BASED ON DIRECT SALARY EXPENSE (DSE)
Architect's Practice Management Considerations 8 Expense Prior Year Budget Year Change 17 Overhead Expense (Line 16B) $ 320,919
Encourages internal budgeting ● ● ● 9 Indirect Salary Expense $ 95,958 $ 106,620 $ 10,662 18 Direct Salary Expense (Line 7B) $ 241,380
Keeps records confidential ● ● 10 Payroll Burden (40%) $ 86,897 $ 96,552 $ 9,655 19 Overhead Rate (Line 15 / Line 7) 1.33 OR 133%
BUSINESS OPERATIONS, RESOURCE MANAGEMENT

Fee adjusts automatically for scope changes ● 11 Rent/Utilities $ 27,350 $ 30,085 $ 2,735 D DIRECT PERSONNEL (DPE) BREAK-EVEN MULTIPLIER
Invoicing is easily understood ● ● 12 Maintenance/IT $ 16,000 $ 16,800 $ 800 20 Direct Salary Expense (Line 7B) $ 241,380
Allows for greatest profit, also carries greatest risk ● ● 13 Office Supplies $ 4,260 $ 5,112 $ 852 21 Payroll Burden (40%) (Line 10) $ 96,552
Allows for base profit but protects against loss ● ● 14 Other $ 52,600 $ 65,750 $ 13,150 22 Overhead Total less Payroll Burden (Line 16B - Line 10) $ 224,367
Allows for quickest start without negotiation ● ● 15 23 Total (Add lines 19, 20, 21) $ 562,299
Permits the firm to guard against 'scope creep' ● ● 16 TOTAL A $ 283,065 B $ 320,919 C $ 37,854 24 Direct Personnel (DPE) Break-Even Multiplier (Line 22 / Line 7) 2.33
Needs greatest definition of project prior to start-up ● ● AIA CODE OF ETHICS - Ethical Canons
Does not penalize architect for project cost savings ● ● ● ● CANON I CANON II CANON III CANON IV CANON V CANON VI
Client Needs and Characteristics General Obligations Obligations to the Public Obligations to the Client Obligations to the Profession Obligations to Colleagues Obligations to the Environment
Client requires quick start without complete project definition ● ● ● - Maintain & Improve knowledge - Uphold the law - Serve Clients competently and - Uphold integrity and dignity of - Respect the rights of colleagues - Be environmentally responsible
Client requires accounting detail ● ● & skill - Never try to influence a public professionally the profession and acknowledge their
Client must have total fee prior to starting project ● ● ● - Seek to raise architectural official with payment - Exercise unbiased judgement - Practice with honesty and professional contributions - Promote sustainable design in
Client has numerous decision makers ● ● standards in aesthetics, - Never help a client with - Not accept projects beyond fairness professional work
Client has extensive experience in the project type ● ● education, research, training, anything fraudulent or illegal professional capacity - Not sign and seal documents of - Provide associates and - Advocate sustainable buildings
Client is oriented to lowest fee ● ● ● and practice - Promote and serve public - Avoid conflicts of interest which they do not have control employees with suitable and site design
Client is developing a prototype for many locations ● - Respect & seek to improve interest - Be truthful in professional working conditions and pay - Use sustainable practices
Project Type and Services society & env. - Render pro-bono services communications - Not knowingly make false - Nurture fellow professionals within their firms and
Well-defined scope and schedule ● ● - Exercise learned professional - Be involved in civic activities - Keep clients informed about statements through education, interships, encourage their clients to do
Prototype with scope/schedule not well defined ● judgement - Strive to improve public their projects - Be honest about qualifications and career the same
Front-end work required for project definition ● - Uphold human rights appreciation for architecture - Maintain client confidentiality and about the work they claim - Give credit to others for their
Franchise restaurants (etc.) where scope is clear ● ● - Not discriminate on base of credit for professional work
Hotel, hospital, or other unit based project ● ● race, religion, origin, age,
Facility surveys, interior design, and others on a piece basis ● disability, or sexual orientation
Site adaptation of a prototypical design ● ●
Permitting services ●
Construction contract administration services only ●
RISK MITIGATION - Insurance E REVENUE PROJECTION - Sample Chart
Professional Liability Insurance General Liability Insurance Property Insurance 25 Project TOTAL JAN FEB MAR APR MAY JUN JULY AUG SEP OCT
- Errors and ommissions insurance - Includes range of insurance that protects - Protects the architect's buildings and 26 Project 1 $ 220,000 $ 40,000 $ 40,000 $ 40,000 $ 40,000 $ 30,000 $ 30,000
protects architects in case one of their against claims of property damage, buiding contents against disasters such 27 Project 2 $ 25,000 $ 15,000 $ 10,000
actions causes damage/injury to person liability, and personal injury caused by as fire, flood, and theft 28 Project 3 $ 70,000 $ 25,000 $ 25,000 $ 20,000
or property architects or their employees, - Basic Form names certain perils that are 29 Project 4 $ 75,000 $ 20,000 $ 20,000 $ 20,000 $ 15,000
- Covers problems from incorrect specs, consultants, or others hired by architects covered under the property insurance 30 TOTAL $ 390,000
drawing mistakes, and negligence. policy. Perils like; fire, smoke, lightning, 31 Proposals TOTAL JAN FEB MAR APR MAY JUN JULY AUG SEP OCT
FINANCES, RISK, & DEVELOPMENT OF PRACTICE, PROJECT WORK PLANNING

- Excludes intentional wrongful acts, explosion, vandalism, sprinkler leakage, 32 Proposal A $ 60,000 $ 20,000 $ 20,000 $ 20,000
claims for estimates being exceeded, riot, aircraft, vehicles, windstorm and 33 Proposal B $ 25,000 $ 12,500 $ 12,500
and claims from expiring warranties hail, volcanic eruption, and sinkholes Proposal C $ 90,000 $ 30,000 $ 30,000 $ 30,000
34
- Required by B101 Contract - Required by B101 Contract 35 TOTAL $ 175,000
Automobile Insurance Worker's Compensation Personal Injury Protection 36 Future Projects TOTAL JAN FEB MAR APR MAY JUN JULY AUG SEP OCT
- Covers liability and property damage to - Mandatory in all states, protects - Protects architects against charges of 37 Retail Planning $ 5,000 $ 5,000
vehicles owned and used by the business employees in the event of injury caused slander, libel, defamation of character, 38 Civic Planning $ 10,000 $ 10,000
by work-related activities misrepresentation and other torts 39 TOTAL $ 15,000
- Required by B101 Contract - Required by B101 Contract 40 PROJECTED TOTAL $ 580,000
Owner's Insurance (Required by A201) Contractor's Insurance (Required by A201) F PROFIT PLAN - Sample Chart UTILIZATION PLAN - Sample Chart
Liability Insurance, Property Insurance for full insurable value of Worker's Compensation, damages because of injury, sickness or 41 Revenue Projection (Line 40) $ 580,000 Licensed in Years of Utilization
Employee # Title Work Experience
work that protects against loss from fire, theft, vandalism, collapse, death of employee, and for non-employee, Personal Injury 42 Reimbursable Expenses (5% of Line 41) $ (29,000) State Experience Rate
earthquake, flood, windstorm, and malicious mischief. The policy Protection for slander/libel/defamation, damages related to motor 43 Consultant Fees (30% of Line 41) $ (174,000) Hospitality, Multi-Family
must be all risk rather than specified peril. vehicle, bodily injury after job is complete, and Contractual Liability 112 Principal YES 30 65%
44 Projected Net Fees $ 377,000 Housing, Retail
Insurance. 45 Direct Salary Expense (Line 7B) $ (241,380)
251 Project Architect YES 11 75% Hospitality, Healthcare
RISK MANAGEMENT STRATEGIES 46 Indirect Salary Expenses (Line 7C) $ (106,620)
1.) Know the client, should not accept a client who is unknowledgeable about construction, expects too much or has poor history of 47 Projected Profit Target $ 29,000 Single Family Housing, Multi-
322 CAD Technician 1 NO 8 90%
payment. 48 Family Housing
2.) Use well written contracts and follow them thoroughly, employ an attorney if AIA contracts can't be used 49 Profit Target (%) 8%
323 CAD Technician 2 NO 5 90% Hospitality, Retail, Healthcare
3.) Make sure appropriate employees are assigned to each project G NET (DSE) TO MEET PROFIT TARGET - Sample
4.) Maintain an active quality control (QC) program, establish a well defined program and objectives for each project 50 Total Projected Net Fees (Line 44) $ 377,000 Administrative
411 NO 3 18% Hospitality, Retail
A.) Use standard checklist & procedures 51 Divide by Direct Salary Expense (Line 7B) $ 241,380 Assistant
B.) Use proven construction methods, details, and specifications 52 Yield Net Direct Salary Expense Multiplier 1.6 OVERHEAD RATE BREAK EVEN RATE NET MULTIPLIER
C.) Maintain communication with everyone who works on a project & understands contractual obligations H UTILIZATION RATE - Sample (Equal to % Charged) Total Indirect Expenses (Line16B)
= Overhead Rate + 1.00 =
Break Even Rate
5.) Maintain thorough documentation: document every decision, meeting, action, observation, through life of project 53 Principal Hours (Line 2) 2,080 Total Direct Labor (Line 7B) Inverse of Targe Profit %
6.) Be careful about last minute changes 54 Principal Chargeable Hours (Line 2) 1352 $ 320,919 = 1.33 + 1.00 For 20% profit it looks like this:
= = 1.33
7.) Carry liability insurance 55 $ 241,380 = 2.33 2.33
= = 2.91
8.) If all else fails, and you are unable to determine an answer using the strategies provided above, an acceptable answer would be to 56 Principal Utilization Rate 65% Target overhead rate = 1.3 - 1.5 For a 10$/hr employee to break 0.8
turn down the project. 57 (Line 54 / Line 53) even, they need to bill $23.30/hr Target 3.0+ for net multiplier
CONTRACTUAL AGREEMENT - Design, Bid, Build CONTRACTUAL AGREEMENT - Construction Manager at Risk (CMc) AIA CONTRACT DOCUMENTS
Contract Description
Civil Subcont. Civil CONSTRUCTION A101 Standard Form of Agreement Between Owner & Contractor
A401 A401

OWNER OWNER A133 MANAGER AS A132 Standard Form of Agreement Between Owner & Contractor, Construction Manager as
Landscape Subcont. Landscape CONTRACTOR Adviser Edition (CMa)
A101
B101

B101

A133 Standard Form of Agreement Between Owner & Construction Manager as Constructor
ARCHITECT A201 CONTRACTOR ARCHITECT Prime (CMc) where basis of payment is Cost-Plus-Fee, with a Guaranteed Maximum Price
PROS of Design-Bid-Build (DBB) PROS of Construction Manager at Risk (CMc) A141 Standard Form of Agreement Between Owner & Design-Builder
A401 A401
C401 C401 C401 C401

C401 C401 C401 C401

Structural - Segmented responsibility Subcont. Structural - Cost guaranteed sooner with a GMP Prime A201 General Conditions of the Contract for Construction
PRACTICE-WIDE DELIVERY OF SERVICES, CONTRACTS

- Clear contract divisions - Reduces owner management requirements A401 Contractor-Subcontractor Agreement
Mechanical - Industry is familiar with this delivery method Subcont. Mechanical - Acts as quality control entity saving CO's Prime B101 Standard Form of Agreement Between Owner & Architect
- Projects attain more competitive bids - Architect continues to protect owner's interests C401 Architect-Consultant Agreement
Electrical CONS - of Design-Bid-Build (DBB) Electrical - Fast-track is more viable Prime G701 Change Order
- Each phase must be complete to move forward CONS of Construction Manager at Risk (CMc) G702 Application and Certificate of Payment
Plumbing - Communication must be controlled Plumbing - Conflict of interest CM not always serving owner Prime G703 Continuation Sheet
- Construction cost unknown until bid phase - Added cost to have a Construction Manager G704 Certificate of Substantial Completion
CONTRACTUAL AGREEMENT - Construction Manager as Agent (CMa) CONTRACTUAL AGREEMENT - Design-Build (DB) CONTRACTUAL AGREEMENT - Integrated Project Delivery (IPD)

Copyright Evolve 4D LLC, Bibliography; 1.) 'Architectural Graphic Standards, Ramsey/Sleeper' 2.) 'Architect's Studio Companion, Allen/Iano' 3.) ARE 5 Study Guide, Ballast' 6.) Designerhacks.com
Civil A132 CONSTRUCTION Civil OWNER Subcont. Civil Subcont.
A401 A401 A401 A401

OWNER MANAGER AGENT OWNER

A141

Landscape Landscape Subcont. Landscape Subcont.

A101
B101

MULTI
PRIME Teaming agreement,
ARCHITECT A201 CONTRACTOR CONTR. ARCHITECT CONTRACTOR ARCHITECT CONTRACTOR Subcont.
or single entity
PROS of Construction Manager as Agent (CMa) Subcont.
A401 A401 A401 A401
C401 C401 C401 C401

C401 C401 C401 C401

Structural - Scheduling may be more expedited Subcont. Structural PROS of Design-Build (DB) Structural PROS of Integrated Project Delivery (IPD) Subcont.
- Cost estimating may occur sooner - Typically the fastest delivery method Subcont. - Reduced involvement from lawyers for disputes
Mechanical - Supervises project, reduces owner's managmt. Subcont. Mechanical - Early cost & construction scheduling Mechanical - Equal buy-in from all parties ensures best intent Subcont.
- Provides cost control & scheduling coord. - Mitigates conflict between architect/contractor - Communication is collaborative, BIM models more
Electrical CONS of Construction Manager as Agent (CMa) Subcont. Electrical CONS of Design-Build (DB) Electrical easily realized
- Added cost to the project - Costs not competitive with bid process CONS of Integrated Project Delivery (IPD)
Plumbing - Estimated cost remains unknown until bid Subcont. Plumbing - Architect not in contractual position to protect the owner's interests Plumbing - Not applicable for all project types or firm structure
- Multi-prime contractors means more admin. - DB entity may be committed before documentation is done - Increased risk as all teams rely on each other
- CMa is not a significant influence on project - Commitment renders potential conflict of interest - Firm finances take on a different structure

TERMINOLOGY PROJECT SCHEDULE - Sample Gantt Chart (Design-Bid-Build Project)

Agency One person (agent) acts on behalf of another (Principal) in dealings with another (Third Party) NOV DEC JAN FEB MAR APR
MAY JUN JUL AUG
Law defines what a person 'owes another including contracts Phase 1 1 15 15 1 15 1 15 1 15 11 15
15 1 15 1 15 1
3 Ways To Establish Duty: Schematic Design
Duty 1.) Terms of a contract, either written or oral Design Development
2.) Legislative enactment - building codes, licensing laws, etc. Construction Documnts
3.) Established by Architect's conduct Bidding
Depend on how parties have conducted themselves in course of performing the work. Architects Building Permits
Implied may be held liable for action or inaction. Implied Duties include: cooperating with contractors, not Construction
Duty interfering with contractor's work, giving relevant info to the contractor, assisting owner in Punch List/Walk Thru
PRACTICE METHODOLOGIES, PROJECT QUALITY CONTROL & EXECUTION

coordinating of the work. Substantial Completion

Liability Legal responsibility for injury to another person or damage to property The project schedule above illustrates the difference between a traditional Design-Bid-Build (shown in gray) and a Design-Build project shown in the red outline. The primary advantage to a deisgn-build
Failure to use due care to avoid harming another person or damaging property project is quick delivery, but one thing to note is that there are two permitting phases. Typically, design-builders will apply for a foundation permit, then the full building permit.
3 Conditions must be met for an architect to be held liable: BUSINESS STRUCTURE
Negligence 1.) A Legal duty must be established between parties Sole Proprietorship General or Limited Partnership Corporations Limited Liability Companies (LLC) Joint Ventures
2.) Must be clear cut evidence that the architect breached that duty - Simplest business type - (2) or more people called - Associations of individuals that exist - Similar business structure to a - Temporary association of (2) or
3.) Must be shown that the breach was the cause of damage or injury - Owned by individual under owner's general partners, share in as legal entity apart from its partnership and sole proprietor with more persons or firms
Improvement to property that enhances its value more than mere replacement, maintenance, or or a company name management/profits/risks members, S-Corp, <100 members limited liability of a corp. - Set up for purpose of completing
repairs; a defense to an owner's defective design claim against architect, under which architect is - Only requires name & location for - Limited' partners receive - Articles of organization must be - They have members who invest and specific project or goal
Betterment
responsible only for extra costs the owner incurs due to the defect, and owner is responsible for business, electronic portion of profits, but have no drawn by attorney and filed with managers - Typ. dissolve when project is over
cost it would have paid had the design been properly performed at the onset. communications, and business say in management appropriate office. - A non-member could be manager - Should be based on formal written
Statute of Sets a time limit which a claim can be made, after that time that claim is permanently barred. Time is license required by local jurisdiction. - LP's comprised of one general - 3 Levels of Corporations: - Also known as Limited Liability agreement describing
Limitations usually set between 3 and 10 years, beginning at substantial completion date. partner, one limited partner Stockholders, Directors, Officers Partnership (LLP) duties/responsibilities, how
Time limit is shorter than statute of limitations and does not begin until problem is first discovered; profit/loss is divided, how the work
and also a second time limit which the claim can be made. Statute of Repose for a claim may be (3) Advantages Advantages will be completed.
Statute of Advantages Advantages
Repose years from discovery with an absolute cutoff (6) years from substantial completion. - Easy to set up - Easy to form - Taxed at lower rate than individuals - Liability limited to person's - Treated like a partnership, but is
- Total control by owner - Brings together skills of several investment not a legal entity
Architects, in theory are protected by parties with whom they have no contractual relationship, as - Expenses and loses may be people, i.e. business - Shareholders taxed separately - Member has no personal liability
Privity development, design ability, &
stated in A201, General Conditions of the Contract for Construction deducted from total income. - Easy to raise capital on stock sale - Profit/loss passed to members to Teaming Agreement
To protect another against loss or damage or to promise compensation for loss or damage. An technical knowledge - Corporation taxed on its profits report on personal tax returns Before joint venture forms, it defines:
Indemnification Clause holds harmless both owners and architects for any damages, claims, or losses Disadvantages Disadvantages Disadvantages Disadvantages - Roles, responsibilities, contract
Indemnify resulting from the performance of any work on the project by contractors or others with whom - Owner personal liable for debts and - All partners liable for the - In effect, it is taxed twice, once on - Members considered self-employ - relationships that will be
architects have no contractual relationship loses other's actions profits and then again on its - Must report, pay self-employment established if awarded project
A violation of a duty or invasion of a right created by operation of law; a private or civil wrong or - If sued, personal assets may be - Income taxed at individual dividends tax, FICA, & Medicare - Not formal business organization
Tort
injury. Tort is usually brought by a 3rd party not part of the construction agreement. siezed rates - Initial cost to set up and formal - Some members of LLC can be Used to market teams and forms
Falls into (2) categories - Difficult to sell business, and usually - If they disagree on business paperwork to maintian, is usually classified as S-Corp, but remains an basis of the joint venture
1.) Includes drawings specs and other doctoral or graphical representations of arch's work dissolves management & one partner outweighed by reduced liability and LLC, taxed like S-Corp.
Copyright tax benefits
2.) The building itself- all rights retained include #1, but also include overal form, arrangement, and - Raising capital depends on leaves, the business usually
composition of spaces & elements in the design. individual owner's credit dissolves