Architects' fees, as a percentage of construction cost, are also showing an increase on 1998 levels. A year ago, the average fee for a new-build design-and-build job was 3.4%. This year, it has reached 3.9%. Traditional refurbishment jobs have also seen an increase, with fees up from 9.2% to 9.5%. Design-and-build contracts for refurbishment projects are more profitable still at 5.3%, compared with last year's 4.5%. Pressure of work has pushed up rates, according to Aziz Mirza, who says the practices he interviewed were all busier than at the same time last year.
Fee increases, however slight, may be good news, but the profit that practices generate leaves architects the poor relations of professions such as accountancy, law and even marketing and public relations.
"Tell me about it," says John Wright, president of the Association of Consultant Architects. "Even when practices make a profit it's usually a very meagre one, unless they take a realistic look at the costs and profit they want out of a job." He says the problem is that, unlike his own practice, the Modern Design Group, many firms quote unrealistically low fees to get the job. It is an attitude that Wright believes stems from the last recession: "Architects were so desperate to get any kind of work that they slashed fees to unrealistically low levels," he says. He believes this practice is still prevalent in the profession.
Wright's firm, on the other hand, operates a computerised system that calculates all salaries and other overheads so that he can work out prices for jobs based on an hourly rate. BDP chairman Richard Saxon also says his firm quotes only prices that it knows it can live with. His practice has not seen fees increase significantly in the past year, but he says it is winning more jobs at what he considers the right price. This, he says, should be a negotiated fee rather than a percentage of the total construction costs, which some say discourages architects from building efficiently and keeping costs down.
Saxon agrees that many practices have priced themselves out of a decent profit, and says they have only themselves to blame. "If you work by quoting below your costs, you're killing yourself," he says. "Architects who survive by undercutting others are acting as bankers for developers and creating a lower market rate for the whole profession. They're idiots." It's a common complaint. Greg Penoyre, of Penoyre & Prasad, blames many architects' lack of business sense. "Architects are really late in developing an understanding that they are in a competitive market," he says. "If we are to do carefully composed and detailed tender bids for every job with a lot of guidance on quality and programming, we have to charge, because it takes up significant time," he says.
Construction Industry Council chief executive Graham Watts says the fact that architects say they are relatively poorly paid is not new – and not universal throughout the profession. "I'm not sure they're badly paid in relation to other construction professionals, either," says Watts. However, he condemns "scandalous" clients that expect a lot of free work before awarding a commission. He has also noticed a worrying trend – an increase in zero-fee work this year.
Watts puts the continuing relatively low fees in the profession down chiefly to how architects are paid: once again, percentage fees emerge as the villains of the piece. "Personally, I'm very much against fees paid as a percentage of the construction cost," he says. "I don't think it gives any incentive to the architect, client or contractor to keep costs down." He believes that once clients see architects delivering good value through cost-saving designs, they will be more willing to pay realistic lump-sum fees or hourly rates. They will also associate architects more closely with other professionals, such as barristers, who charge by the hour.
Will Alsop, of architect Alsop & Störmer, thinks that hourly rates are appropriate for some professions but says design would be hard to quantify in this way. He occasionally charges an hourly rate of £220 when he quotes for short-term consultancy work. Not surprisingly, then, he does not think he personally is underpaid. Neither does he think the profession as a whole is – providing there is enough work to go round: "A lack of consistent workload is the problem, as it is for a lot of professionals – except perhaps lawyers, because they trade in doom and gloom. What we trade in is joy and delight and no one wants to pay for that, especially when times get hard."
