“We are professionals, and we want to be compensated for our time,” Petrucci says. “If the potential client doesn’t respect that our time is worth paying for then they’re not the type of client we’re interested in doing business with.”
Once you decide to begin charging for design, the first question that naturally arises is: How much should I charge? Though design fees vary widely, most seem to fall between 8% and 10% of the total project budget. A retainer, usually about 10% of the total design fee, is often collected at the time the design agreement is signed.
For a company just breaking into design/build, coming up with the design fee is usually an evolutionary process. Benvenuto began his design/build career charging only a nominal fee for design and was able to increase his fee as his company’s reputation spread throughout the community. “The progression of our fee went from hundreds of dollars to a fixed percentage of the construction cost (about 10% of the total job cost),” he says.
Benvenuto charges a retainer that is 1% of the total job cost (or 10% of the total design fee) when clients sign the preliminary design agreement. After the budget is approved, the retainer is upgraded to one-third of the projected design fee. It is upgraded once more to two-thirds of the projected design fee after the permit drawings are completed; the final third of the design fee is collected when the construction contract is signed. If the final approved budget exceeds the original projected cost, then the design fee is also adjusted to reflect the increase.
Wilkinson has a scaled offering of design services, beginning at 8% for the basic plans and permits, and going up to 12% for full-color 3-D interior and exterior renderings.
Tabor has his design process broken down into 10 clearly defined meetings. The first half of the design fee (usually 8% of the projected budget) is due at the second meeting, when the design agreement is signed. The second half of the payment is collected at meeting number six, after detailed design drawings have been approved and the selections process is well under way.
Charging properly for design services insures you against clients who may get cold feet just before signing a construction agreement or who may be shopping between two or more design/build companies. Collecting a retainer ensures clients are serious about their projects from the outset.
Once the design is complete, the focus turns to the execution of the details. A seamless transition from design to production is the final challenge in the design/build process.
PASSING THE BATON One of the greatest advantages of design/build is that the same company has complete control of a project through each of its phases, so by the time it comes time to build, it should simply be a matter of following the directions the company has prepared for itself. But how best to ensure that what gets built mirrors the design exactly, especially when much or all of production is handled by subcontractors?
First and foremost, it is important to arrange a “trade day” at the site — a day where all trade contractors involved in the project come to view the existing conditions, review the design, and discuss how they’ll move forward. Though this day might look slightly different from one company to the next, it is equally important for all. Pickell has a “seven-signature set” of prints on which each of the trades must sign off after visiting a jobsite. “Everyone is looking for different things,” he explains. “If you’re a builder and you see a design feature that looks bogus, you can bring it up here.”