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Competition creates crunch time on costs

COSTING is a delicate subject in a marketplace as fiercely competitive as the Perth architectural sector. With some selection criteria allocating nearly 50 per cent weighting to fee costs and only 30 per cent to a firm’s ability and experience, it is no wonder architectural firms are feeling the pressure.

Architectural costs are traditionally expressed as a percentage of the total building cost. De-pending on the complexity of the project a reasonable fee could be between 4.5 per cent and 6.5 per cent. On the large-scale end of institutional work and one-off residential, fees can get up to around 10 per cent.

Bollig Design Group Pty Ltd managing director Edwin Bollig said some firms were quoting unrealistic fees as low as 2.5 per cent.

“It costs me about that just to open my front door, there is no way we can compete against a firm that has fees that low,” he said.

Mr Bollig said firms were farming work out to subcontractors, thereby reducing their overheads. However this practice was rife with issues of quality control, he said.

“You are relying on this individual to get it right. There is a lack of appreciation that three people cannot do the work of 10,” Mr Bollig said

According to feedback from builders, more firms are doing projects with fewer drawings and less planning.

“We are old-fashioned and stand by the saying you get what you pay for,” Mr Bollig said.

“If I get a fair fee I would be more likely to put those extra days in and save the client those extra fees on the cost of the overall building project.”

Saleeba Adams Architects man-aging director Trevor Saleeba said unrealistic and unsustainable fees had caused documentation standards to drop to unacceptable levels, which was reflected by increased building costs.

“They are pushing the cost of design into the construction end where it is not distinguishable,” he said.

“This extra cost is lost in the tender and construction process, but builders want good documentation that they can build from efficiently and officially.”

More sophisticated developers were recognising the hidden costs in trying to cut corners at the design stage, Mr Saleeba said.

Other factors impacting on architect fees are changing technology, which adds to the fixed cost base even if there are efficiency gains, increasing insurance, and compliance issues, such as the Disability Discrimination Act.

Parry & Rosenthal Pty Ltd chief executive Graham Whitley said every firm had a different multiplier to generate an hourly rate per staff member that gave an indication of cost margins.

He said his firm preferred to use core staff and only pulled in subcontractors when overloaded.

“We know our core staff know our style and quality control habits, with contractors we are not so sure, also accountability is an issue,” Mr Whitley said.

Architecture costs were based on paying for time, he said.

“You get a set of drawings and a few other tangible things but primarily you are paying for time,” Mr Whitley told WA Business News. 

“Ideas come from someone sitting down and listening to clients and then going away to create something they want.”

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