PROFESSIONAL PRACTICE COMMISSION

Recommended Guideline for the Accord Policy

on the Development of Architects Compensation
 Drafting Panel Chair: Sven Silcher, Germany
Drafting Panel Members: Phillip Crafford, South Africa
Bonnie Maples, Canada
Graham Scott Bohanna, Australia

Approved at the 2014 UIA General Assembly in Durban, South Africa

Joint Secretariat of the UIA-Professional Practice Commission

The American Institute of Architects The Architectural Society of China

Rick A. Lincicome, AIA Co-Director Prof. Weimin Zhuang
1735 New York Avenue, NW Architecture and Design Institute
Washington, DC 20006 USA Tsinghua University
Tel : +1.703.682-9078 Haidian District, Beijing, China 100084
Fax : +1.703.682-4901 Tel: +86.010 62 77 31 70
Mail : [email protected] Fax: +86.010 62 78 47 27
[email protected] Mail: [email protected]
Recommended Guideline for the Accord Policy
on the Development of Architects Compensation1

Accord Policy
The architect’s compensation must be calculated to recover all the architect’s costs in connection
with the fulfilment of the contract, with an allowance for risk and for building up an investment
reserve and to allow for a fair profit. Appropriateness of the compensation is not only measured by
the architect’s obligations arising from the specific contract but also with regard to the architect’s
general obligations towards the client, the profession and to society as laid down in the UIA Accord
on Recommended International Standards of Professionalism in Architectural Practice.
Professional organisations should – for the benefit of the members of the profession as well as of
the consumers as the potential clients – actively involve themselves in setting up and maintaining
information systems, based on historical data, about the appropriate range of compensation for
the architectural services, differentiated by type, size, complexity and construction quality standard
of projects.
Architects shall not propose a fixed compensation to undertake work where there is insufficient
information on the nature and scope of the project. Deliberately undertaking work for a compen-
sation insufficient to cover the architects net expenses for providing an appropriate level of profes-
sional service is unethical and considered unfair competition.

Introduction
Architects are the sole professionals who are qualified through education, training and continuous
professional development to design and to provide advice, including technical and aesthetic
judgement, on the built environment. Architects provide services and solutions with technical
competence and aesthetic sensitivity suitable to the physical, social, cultural, and economic
environment. In this architects not only have responsibilities to their clients but also to the
community and its citizens as a whole. In matters of public health and safety, architects are legally
obliged to serve the public interest and respond to the public need. These concepts of health and
safety are continuously being expanded for example to encompass the sustainability of the global
environment and accessibility for all persons.
Architects add value to building projects by creating a design and layout that combines function-
ality with aesthetic sensitivity. In addition, architects design for construction durability and energy-
efficiency and with a look and visual impact that provides a positive experience which may also
bring an increased market value to owners and users.

1
Languages usually have different expressions for the negotiable remuneration of e.g. the members of
liberal professions on the one hand, such as
- honoraires, onorario, honorario, Honorar
and for the prefixed price for tickets for transportation, theatres, cinemas etc. or administration charges on
the other hand, such as
- taxe / tarif, tassa, tasa, Gebuehr
For all these different meanings the English language uses the word ‘fee’. The prevailing understanding in
this is that it is a price fixed beforehand by one side of the involved parties and not formed by negotiation:
Visitors cannot negotiate the entrance fees for theatres, museums etc., nor can the average citizen negotiate
administrative fees set by authorities. It is not obvious for the average English speaker that there is a
different situation regarding the remuneration of, for example, an architect.
Therefore the use of the expression ‘fees’ in connection with information systems on the calculation of
architects’ remuneration or with any other cost information system or regulation about ‘fees’ is bound to
provoke resistance by competition authorities in the Anglophone parts of the world right from the mere
headline already, even if non-mandatory.
As a result of these reflections it was decided to use the neutral term ‘compensation’.

PPC – Guideline Compensation – page - 1 -

The work of the architect may be described as the creation of a prototype. Therefore the archi-
tect’s compensation differs with every project. Product and price cannot be viewed in a catalogue
beforehand. Nevertheless an information data base for the calculation of the architect’s compensation
is not only in the interest of the members of the profession but also in the interest of consumers as
potential clients. It is a major instrument of consumer protection.
A generation ago expectations and roles within the planning and construction sector were gen-
erally consistent and clearly understood. An architect’s services for a building project and the
roles of the different participants in the planning and building process were clearly defined, based
on a standard set of conventions and procedures. Therefore it was relatively easy to identify the
typical compensation for the services of an Architect for a particular building type. Schedules of
fees for architectural services based on a percentage of the construction cost were widely
accepted and used in many regions of the world.
Therefore a system for the determination of the services and compensation for the architects
– mandatory or on a recommended basis – exists in many states. In some states these systems
are legislated, but more frequent such systems have been developed by the profession or private
organisations.
The situation has changed and many existing systems for the determination of the services and
compensation for architects do not meet the requirements of today. It has become necessary to
examine every individual building project to determine the appropriate fee for the services the
architect is to provide. The practice of architecture and the provision of architectural services has
evolved considerably. Today the architect and client must agree upon a wide range of project
requirements and negotiate an appropriate fee based on the unique aspects of the services to be
provided for each project.
State legislated architect’s fee scales originally had been part of a ‘Contracte Social’: Society
generally acknowledged the outstanding importance of the results of an architect’s services for
the quality of the built up environment and therefore agreed to procure the services on the basis
of quality alone and not of price. Competition among architects was about quality and not about
price.
The consensus which had backed this Contracte Social has vanished. Unhindered economic
competition is a major consideration of many national and supranational political organisations,
for example the WTO or the Commission of the European Communities. There is no room for fee
scales in their competition philosophy. Nevertheless there are several well founded arguments
why some regulation of professional services may be necessary:
 A first argument is based on the concept of “asymmetry of information” between customers
and service providers. A defining feature of professional services is that they require practitio-
ners to develop and display a high level of technical knowledge. Consumers may not have
this knowledge and therefore find it difficult to judge the quality of the services they purchase.
Professional services are “credence goods” the quality of which cannot easily be judged either
by prior observation or, in some markets, by consumption or use.
 A second argument is based on the concept of “externalities”. In certain markets, the provi-
sion of a service may have an impact on third parties as well as the purchaser of the service.
An inaccurate audit may mislead creditors and investors. A poorly constructed building may
jeopardize public safety. There is a danger that the providers and purchasers of these ser-
vices fail to take proper account of these external effects.
 A third argument is based on the concept of “public goods” Certain professional services are
deemed to produce public goods that are of value for society in general. These might include
the correct administration of justice or the development of high quality urban environments.
There is a danger that without regulation some professional services markets might under-
supply or inadequately supply public goods.2

 In markets where search costs are high, it may indeed be advantageous for consumers to
have access to accurate information about typical prices. However there are alternative meth-

2
Report on Competition in Professional Services of 09.02.2004 of the Commission of the European
Communities, chapter 4. Restrictive Regulation in the Liberal Professions (ciph. 24, 25, 26)

PPC – Guideline Compensation – page - 2 -

 ods of providing price information. For example the publication of historical or survey-based
price information by independent parties (such as a consumer organisation) might provide a
more trustworthy price guide for consumers, which distorts competition to a lesser extent.3
In view of the worldwide differences in cost levels and in the range of architects professional work
patterns and responsibilities and considering the legal constraints, any attempt to develop
something like a international cost information system for architects services would be a vain
undertaking.
Therefore the UIA can only provide generally valid principles and methodologies for the
development of architect’s compensation systems under different economical, business-
management and professional conditions. The understanding of methods to develop the
appropriate compensation is vital for every architect in any part of the world. This knowledge,
though decisive for professional survival, is generally not taught in architecture schools, and there
are only few examples known, where this is part of the internship-curriculum between school-
diploma and admission to the profession
At this point a special responsibility of professional organisations has to be highlighted. They
should support their members in the effort of developing an appropriate cost information system
by collecting historical data on office-costs and / or working time standards in relation to specific
architectural services.

Recommended Guideline
The basic elements of any compensation calculation are
1. The Hourly Rate
for every member of the office
The hourly rate is composed of
 individual fee-earning working hours per year
which after subtraction of
- Saturdays / Sundays / legal holidays, contractual holidays, days of illness and other
- general office administration tasks
- CPD
- acquisition / architectural competitions
- other not fee-earning activities
will finally amount to only 36% – 54% of the initial theoretical 2.920 working-hours of a
year (365 days à 8 hours) in some regions of the world.
The percentage of fee-earning working hours decreases with growing experience and
responsibilities of an employee. It will be low for the office principals and high for technical
drafting personnel.
In other traditions the usual starting figure already neglects the non-working days
Saturday and Sunday which normally leads to 261 days à 8 h = 2.088 h = 100%.
The respective percentages for effective fee-earning working hours are: 50%-75%.
These figures which resemble e.g. an European average will probably differ considerably
in various regions around the world, due to different cultural, social and religious traditions
and to different market conditions.
The individual share of any member of the office in the yearly total expense of the office
(proportionate to her/his share in the total fee-earning working hours of the office) consists of
 the individual gross salary
 the individual social expense (legal + voluntary)
 a share in salaries and social expenses for non fee-earning office personnel
 a share in material expense for office space, information technology, general working
material, insurance, fees to professional organisations etc. etc.
 a share in the calculatory principals salary

these five expense items represent the net expense

On the net expense should be added:

3
Report on Competition in Professional Services of 09.02.2004 of the Commission of the European
Communities, subchapter 4.2 Recommended Prices (ciph. 39)

PPC – Guideline Compensation – page - 3 -

  a surplus for building up an investment reserve
 a surplus for risk + profit
The resulting rate per hour will be 200% - >240% of the hourly rate of the gross salary alone.
Mastering this basic of office management and keeping the necessary time- and bookkeep-
ing-records is an indispensable obligation for any architect who runs his own office.
Professional organisations should provide their members with appropriate IT based tools.
It has to be pointed out, that different traditions exist about handling these expenses. In some
regions many of the above expenses items belong to the reimbursable expenses and are
reimbursed directly or as a percentage of the agreed-on compensation.
Appendix III. to this guideline deals more extensively with the subject of the hourly rate and
contains calculation sheets on MS Excel basis as well.

2. Pre Estimation of the Necessary Working Time for the Execution of a Commission
The complexity and difficulty of pre-estimation of the working time required for the execution
of any architectural service has been and continues to be the major reason for the existence
of fee scales and other types of cost information systems. The information about prices for
architects services are indeed highly advantageous for consumers, who generally are not
experienced in commissioning an architect. Building a house is quite different from buying
goods for daily life in a supermarket and even very different from buying an automobile.
Existing cost information systems are generally based on the survey and evaluation of histori-
cal data from a multitude of architectural projects. Survey and evaluation has as a rule been
executed by independent experts.
The common methods for defining the architects compensation and their
characteristics are:
1. Time Charge Compensation 1 (de facto working time, final statement retrospectively)
The architect charges for his / her work on a hourly / daily / weekly rate. The compensa-
tion depends on the architect’s actual working time. There remains a high degree of
uncertainty about the final compensation.
2. Time Charge Compensation 2, Project-Type + -Size related (historical data)
The architect charges for his / her work on a hourly rate. The charged working time is
based on historical data for comparable projects collected and evaluated by independent
sources or from the architects own records. The working time in relation to type, size and
other specific characteristics of the project can be accurately assessed. The final compen-
sation can be fixed in an early stage of the project – once the size in m² or m³ is known.
3. Floor Area related Compensation
The architect charges a fixed compensation per m2 gross floor area or useable floor area
or per m3 volume of the project. The compensation unit is usually related to a planning
phase. The final compensation can be fixed in an early stage of the project – once the
size in m2 or m3 is known.
4. Percentage Compensation
The architect charges a percentage of the construction cost of the building. The percent-
age is based on historical data collected and evaluated by independent sources or from
the architects own records. The percentage differs with type, size and other specific char-
acteristics of the project and varies in relation to the construction cost (digressive scale)
The exact final compensation develops with the construction cost of the project and is not
fixed beforehand.
4a. Fixed Percentage Compensation
This variation of the Percentage Compensation uses a fixed percentage of the construc-
tion cost, independent of the construction cost and sometimes even without any reference
to size, type and other characteristics of the project.
5. Lump Sum Compensation
The architect charges a fixed lump sum fee which is usually developed by one of the
methods a. - e. in an early stage of the project.

PPC – Guideline Compensation – page - 4 -

 6. Commercial Compensation Negotiation
In some circumstances the profitability of a project or a particular phase of a project may
be very high for the client, and this could be enhanced by the skill of the architect. Building
projects frequently increase in value right after completion and a value of 110 – 120% of the
invested sum is common. Therefore in some cases architect and client may be willing to
negotiate a special compensation structure to reflect this. This could include an enhanced
compensation for success and / or a reduced compensation (or nil compensation) in the
case of failure. (see also Appendix IV. Reflections on Incentives)
In common to all these methods is that the development of compensations needs two appro-
priate tools: To calculate the hourly costs of the architect’s office and to enable a pre-estimate
of the working time and other expenses necessary to complete a specific service contract.
A comparison of the advantages or disadvantages of these methods must take into account
the following criteria:
a. Transparency, traceability of the basis for establishing the compensation
b. Adaptability + flexibility towards changing economic and professional conditions as well
as to variations of project parameters
c. User friendliness
d. Predictability of the final compensation
e. Preliminary expense for the development of the method
f. Comparability between countries
g. Compliance with competition law
h. Consumer friendliness
For a more thorough comparison of the above methods see Appendix I. to this guideline.

3. Other Variables Affecting the Architects Compensation

As indicated in the introduction the planning and construction sector has become increasingly
complex and each project will be subject to certain unique factors which must be considered
when determining appropriate compensation.
These factors are e.g.
 Scope of Services
Traditional Architectural Design Services or other
 Project Delivery Method and Construction Procurement
Sequential Tendering
Design-Bid-Build
Design-Build
Public Private Partnerships (PPP)
Other
 Schedule and Fast Track Projects
 Project Documentation and Computer Modelling
 Coordination of Specialist Consultants
 Complexity of Building Permit Process (authorities having jurisdiction)
 Submittals
 New Technologies
 Construction Administration
 Project Location and Site Conditions
 Renovation / Alteration to existing Buildings
often to be executed while occupied
 Intervention in Listed Buildings
 Repeat Work or Repetitive Designs
 Demobilization and remobilization (Stop and Start-up of Workforce)
 Phased Building Occupancies
To take regard of all these factors in the basic information system (e.g. fee scale or scale of
working time) would make the scales endless and very complicated. It is therefore recommen-
ded to introduce multiplying factors to adjust the basic compensation. Sometimes the variable
may result in a reduced compensation such as for repetitive design work, limited project docu-
mentation, or the elimination of entire phases.

PPC – Guideline Compensation – page - 5 -

4. Creation of Information Systems for the Compensation of Architects Services
The survey, collection and evaluation of historical data on completed architectural services
should be commissioned to independent experts in the field of statistics with special
experience in the planning sector.
Competition authorities would prefer such tasks be undertaken by “independent“ organisations
and not by professional associations. The Commission of the European Communities, for
example. suggests, that such information should be published by consumer organisations.
Architectural services generally do not rank high enough in the daily activity and interest of
consumer organisations to justify the high investment necessary to execute a complex survey
of this kind. Furthermore the logic of, why a consumer organisation would be more independent
than a professional organisation in conducting such a survey remains to be explained. As long
as such a survey is not commissioned and published by relevant state authorities it would be
in the justified interest of both professional organisations and customer organisations to do so,
provided the necessary due diligence towards competition rules is observed.
To enable such surveys, professional organisations should oblige their members to place the
relevant historical data on completed projects at the disposal of the organisation for an
independent survey. Data safety measures, anonymity and stringent precautions against the
leaking of confidential information must be observed and guaranteed.
Survey and evaluation should differentiate by
5-7 categories of planning and execution tasks of different complexity
a thorough and comprehensive catalogue of building and project types, allocated
to these categories will help to avoid lengthy discussions in contract negotiations
3 subcategories of execution standard (simple, average, complex) in each main category
A complete catalogue of the architects responsibilities and scope of service within the main
characteristic project phases
 Pre Design Services *)
 Preliminary Design
 Final Design / Building Permit Application
 Construction Documents (Drawings / Tender Documents)
 Bidding / Negotiating / Contract Awarding
 Construction (Supervision / Contract administration)
 Post Completion Services *)
*)
these services are usually not part of the traditional scope of services and therefore not included in the
basic compensation listed in cost information systems

should be included.

5. Final Reflection
Most existing cost information systems belong to method 4. Percentage Compensation.
Nevertheless due to the wide range of project requirements in many building projects this
method often cannot satisfy the specific needs of the increased complexity any more.
Very often the project and the client are best served by a combination of different methods of
compensation rather than one single fee. Frequently it is more appropriate to use one method
of compensation for one phase of the project and a different method of compensation for
another phase.
For example, in the dealing with authorities to obtain approvals for a project, which can be
indeterminate in complexity and time, it may be fair to compensate the architect on an agreed-
to hourly rate by method 1. Time Charged Compensation 1. However the project documen-
tation could then be compensated on a percentage fee based on the construction cost for the
project by method 4. Percentage Compensation.
In another instance, specific additional services, such as the preparation of an architectural
rendering or marketing materials, could be provided at a fixed price or lump sum. Other ser-
vices for the same project could, in turn, be remunerated on the Percentage Compensation
method or the Time Charged Compensation method.

PPC – Guideline Compensation – page - 6 -

 The direct interdependence between construction cost and compensation has turned out to
be a major weakness of the method under two aspects especially:
 Times of crisis in the construction sector often involve a major decline in prices/
construction cost. The architect’s compensation may decrease by 10% and more
while work-load for the project and office cost level remain unchanged. And even
worse, the decline in prices tends to bring about a decrease in construction quality
standard which leads to an increase on the demands on the architect in the phase
site supervision / contract administration and on his liability risks.
 An architect’s special effort for cost saving building-design or construction is punished
through a lesser compensation. A negligent handling of these factors on the architects
side is rewarded with a higher compensation. Especially the latter effect has proven a
serious psychological handicap of this method in the relation between architects and
clients.
Besides the deficits of the Percentage Compensation method mentioned before the comparison
of advantages and disadvantages of the different methods shows, that method 2. the Time
Charged Compensation 2, Project-Type + -Size related based on historical data, has a
very good potential to become the method of the future because of the following criteria:
 The method enables the best comparability between countries, because differences
between countries in the relation between construction cost-level and cost-level in the
architect’s office (which can distort comparability in the Percentage Compensation
method) have no effect on the comparability, an important aspect in a globalized
market.
 The method has the best chance to satisfy restrictive requirements set out by competi-
tion legislation because it will not result in a fee scale but in an information system on
the average appropriate working hours for a specific architect’s service. The hourly
rate charged will be a matter of the individual architect’s office.
Therefore a completely and correctly described planning task leads to different com-
pensations among market participants, due to their different hourly rates.
However it cannot be neglected, that in some jurisdictions the publication of even the
most carefully assembled cost information system of any kind will fail to satisfy the
relevant authorities and may result in a fine or other punishment for the publisher.
 A positive side effect is that, to use this method architects are forced to observe
economic management principles in their offices, more than under a fee scale with a
fixed range of fees.
In professional environments, where architects often tend to consider business issues
as below their dignity – and these environments still do exist - this will have a positive
educational value.
 The disadvantageous automatic effects of the Percentage Compensation method
mentioned above do not occur.
 A major negative aspect of the Time Charged Compensation 2, Project-Type + -
Size related method, based on historical data, is the high initial expense for the
development of the method. Data collection and evaluation are time consuming.
Data bases should be permanently expanded and updated to remain relevant.
However this is true for the Compensation method as well and there especially the
updating is even more complex and challenging.

See also appendices:

I. Comparative advantages and disadvantages of the methods for defining the
architects compensation
II. Overview on existing Cost Information Systems / Fee Scales / Methods for
Calculation of the Architects Compensation
III. Calculation of Hourly Rates in Architects Offices
IV. Reflections on Incentives (under development)

PPC – Guideline Compensation – page - 7 -

 Appendix I
to the Recommended Guideline for the Accord Policy
on the Development of Architects Compensation

Comparative advantages and disadvantages of the

methods for defining the architects compensation

Drafting Panel Chair: Sven Silcher, Germany

Drafting Panel Members: Phillip Crafford, South Africa
Bonnie Maples, Canada
Graham Scott Bohanna, Australia


Approved
 at the 2014 UIA General Assembly in Durban, South Africa

Joint Secretariat of the UIA-Professional Practice Commission

The American Institute of Architects The Architectural Society of China

Rick A. Lincicome, AIA Co-Director Prof. Weimin Zhuang
1735 New York Avenue, NW Architecture and Design Institute
Washington, DC 20006 USA Tsinghua University
Tel : +1.703.682-9078 Haidian District, Beijing, China 100084
Fax : +1.703.682-4901 Tel: +86.010 62 77 31 70
Mail : [email protected] Fax: +86.010 62 78 47 27
[email protected] Mail: [email protected]
Comparative advantages and disadvantages of the methods for defining the
architects compensation
A comparison of the advantages or disadvantages of the methods for defining the
architects compensation must take into account the following criteria:
a. Transparency, traceability of the basis for establishing the compensation
b. Adaptability + flexibility towards changing economic and professional
conditions as well as to variations of project parameters
c. User friendliness
d. Predictability of the final compensation at an early stage of the project
e. Preliminary expense for the development of the method
f. Comparability between countries
g. Compliance with competition law
h. Consumer friendliness

1. Time Charge Compensation 1 (de facto working time, final statement

retrospectively)
a. Once the hourly rate is agreed this method is transparent and traceable as far
as the calculation is concerned.
On the other hand the average client cannot judge whether the amount of
hours charged is appropriate to the service and resembles effectiveness.
Over all the transparency of this method is a little less than sufficient.
b. Adaptability and flexibility towards changing economic and professional
conditions as well as to variations of project parameters are very high. The
only difficulty may arise from an agreed hourly rate under unusually rapidly
changing economic conditions
c. The method is very easy to handle, so the user friendliness is good
d. Non-predictability of the final compensation is the eminent characteristic of
this method. There remains a high range of uncertainty about the final
compensation for the client, while the architect is vulnerable if there is a
dispute.
e. Only management tools to calculate the hourly costs of the architects office
and for time management are needed. No survey, no data collecting are
necessary.
The necessary preliminary expense for the development of the method is
extremely low.
f. The comparability between countries with the same pattern of the architects
missions is very good – if the final compensation is predicted at the start or
once the serviced is finished.
g. The method, provided the hourly rate is freely negotiated between the parties
and not enforced by state authorities or professional or other organisations,
complies with competition law.
h. Due to the deficits in a) and d) this method cannot be judged as consumer
friendly
Closing remark.
The time charge compensation method has its right of existence as additional
auxiliary method parallel to any other method to calculate extra time expense in case
of unforeseeable disturbances in the regular process of the architects service –
provided not the architect himself has to answer for the irregularity.
There are also cases e.g. in existing structures where the full range and the amount
of necessary architects services develops only with the progress of works.

PPC –Guideline Compensation – Appendix 1 - page - 1 -

2. Time Charge Compensation 2, Project-Type + -Size related (historical data)
Time charge compensation methods, based on the collection and statistical
evaluation of historical data, are generally found as time consumption scales.
These scales show the appropriate average-amount of working hours necessary to
perform a specific service. The figures depend on the following parameters:
Complexity of the planning task (type of building etc.)
cost-relation construction / mechanical
cost-relation raw construction / finishing construction
2 3
Size of building (gross floor area in m or volume in m )
New building / conversion / special services
Profile of services
a. This method is transparent as far as the calculation is concerned.
The transparency of the survey and the statistical evaluation process which
has led to the working hour figures cannot disclose itself to the average user
of such scales.
A general reference to the representativeness and the reliability of the
statistical basis and to the independence of the evaluators will be necessary.
Adequate explanations must have the necessary quality to establish the
client’s trust.
The necessity to carefully calculate the hourly rates necessary to cover all
costs and to allow for an appropriate surplus for risk and profit considerably
strengthens the architects negotiation competence in comparison with
methods which are mainly based on a fee per project unit or a percentage of
the construction cost, e.g. methods 3. and 4.
Under these provisions this method is very transparent and its basis
traceable.
b. Adaptability and flexibility towards changing economic and professional
conditions as well as to variations of project parameters are very good as long
as they influence the parameters that determine the amount of chargeable
working hours.
c. The use of this method is of medium difficulty. The appropriate classification
of the complexity of a project will never be absolute. It develops in
discussions between client and architect and may take some time.
d. The final compensation can be defined at an early stage – once all relevant
parameters are clear.
e. The necessary preliminary expense for the development of the method is very
high. Data collection and evaluation are very time consuming. Data bases
should be permanently expanded and updated.
f. The comparability between countries with the same pattern of the architects
services should be excellent. Differences between countries in the relation
between construction cost and cost of the architects office have no effect on
the comparability. However differences in administrative procedures, in
climate and geology, in client’s expectations and other matters make the
comparison more difficult in reality.

PPC –Guideline Compensation – Appendix 1 - page - 2 -

 g. A completely and correctly described planning task leads to different
compensations among market participants, due to their different hourly rates.
The method, provided the hourly rate is freely negotiated between the parties
and also provided the collection and evaluation of historical data is executed
by independent experts and not enforced by professional or other NGOs,
complies with competition law. As far as cost information systems are
published by professional or other NGOs and not by state authorities in a
legislation-backed process, competition authorities tend to have reservations.
Competition rules are more strictly interpreted by the relevant authorities in
some countries by comparison with others, as a result of cultural differences
and perhaps economic pressures.
h. From the architect’s professional view the method may be judged as very
consumer friendly.

3. Floor Area related Compensation

2 3
Fixed fees per m gross floor area or useable floor area or per m Volume of the
project are a relatively simple method, often used in the absence of more complex
systems or fee scales. The parameters mentioned under method 2 could be
applied with this method as well and so lead to a great variety of respective values
per unit.
De facto in the existing examples this method is used in a very simple way
without a high variety of values. They are not based on historical data and depend
mainly on offer and demand respectively on the reputation of the single architect.
a. This method is transparent as far as the calculation is concerned.
b. In absence of any historical data basis the formation of the values per unit
can be somewhat arbitrary and potentially not transparent.
c. Adaptability and flexibility to changing project parameters are good because
there were only very few parameters to influence the calculation unit from the
beginning. Adaptability and flexibility towards changing economic and
professional conditions are good as well as only the fee per unit has to be
adapted.
b. The use of this method is simple.
c. The compensation can be fixed when the design is finished.
d. The preliminary expense for the development of the method is almost nil.
e. A direct comparability between countries with the same pattern of the
architects missions and the same method is at hand. However differences in
administrative procedures, in climate and geology, in client’s expectations and
other matters make the comparison more difficult in reality.
f. As every market participant forms his personal unit-value, compensations
may differ considerably. The method complies with competition law. As far as
cost information systems are published by professional or other NGOs and
not by state authorities in a legislation-backed process, competition
authorities tend to have reservations and in some countries even to forbid the
publication of suggested fee scales.
g. The method is very rough and of inadequate adaptability to the specific
characteristics of the project. Therefore it is not especially consumer friendly.
But it may be quite useful for standard building types, for example.

PPC –Guideline Compensation – Appendix 1 - page - 3 -

4. Percentage Compensation
Percentage compensation methods which define the compensation as a
percentage of the construction cost are based on the collection and statistical
evaluation of historical data and found as fee scales / fee order as well. The exact
definition of ‘construction cost’ is necessary.
The percentage depends on the parameters:
Complexity of the planning task (type of building etc.)
cost-relation construction / mechanical
cost-relation raw construction / finishing construction
Scale in xx steps / gliding scale
Level of construction cost (digressive scale, interpolation for intermediate values)
New building / conversion / special services
Profile of services
a. This method is transparent as far as the calculation is concerned.
The transparency of the survey and the statistical evaluation process which
has led to the percentage values cannot disclose itself to the user of such
scales. In absence of a direct relation to a necessary working time input this is
clearly more difficult than with method 2 and handicaps the architects
argumentation potential in contract negotiations considerably. Even the
general reference to the representativeness and the reliability of the statistical
basis and the independence of the evaluators does not help very much.
Under these provisions this method is only of restricted transparency.
b. Adaptability and flexibility to changing project parameters are good as they
usually influence the construction cost. But see d).
c. The use of this method is of medium difficulty. The appropriate classification
of the complexity of a project will never be absolute. It develops in
discussions between client and architect and may take some time.
d. The characteristic of this method is that the exact final compensation is not
defined at an early stage unless it is combined with the lump sum method.
But at least cost calculation and controlling of the project narrows the range in
which the final compensation will be found in the course of planning process
from initially ±10-20% to ±3-5% at the beginning of the construction process.
A weakness of this method is the direct interdependence between
construction cost and compensation: An architects special effort for cost
saving building-design or construction is punished through a lesser
compensation. A negligent handling of these factors on the architects side is
rewarded with a higher compensation. Especially the latter effect has proven
a psychological handicap of this method in the relation between architect and
client.
e. The necessary preliminary expense for the development of the method is
high. Data collection and evaluation are time consuming. Data bases should
be permanently expanded and updated. The development of the method is
very similar to method 2, but it goes one step further by transmitting the
working hours into a fee by taking certain average hourly rates at the time of
the development as a basis.
Updating of the fee is much more complex than with method 2 because
3 major factors have to be considered simultaneously:
- Changes of cost level in architect’s offices
- Changes of cost level in the construction industry
- Changes in the general relation between cost level in the construction
industry and cost level in architect’s offices

PPC –Guideline Compensation – Appendix 1 - page - 4 -

 f. The comparability between countries with the same pattern of the architects
missions is only with restrictions. Existing differences between countries in
the relation between cost level in the construction industry and cost level in
architect’s offices my considerably distort the comparability. In addition
differences in administrative procedures, in climate and geology, in client’s
expectations and other matters make comparison even more difficult.
g. A completely and correctly described planning task with defined construction
cost leads to identical compensations for all market participants. There is no
competition on price with this method. Therefore even the collection and
evaluation of historical data by independent experts and the publishing of the
so developed cost information systems by state authorities in a legislation-
backed process, does not satisfy competition authorities. Competition rules
are more strictly interpreted by the relevant authorities in some countries by
comparison with others, as a result of cultural differences and perhaps
economic pressures.
h. From the architect’s professional view the method seems consumer friendly.
This view is not shared by competition authorities due to the factors mentioned
under g.

4a. Fixed Percentage Compensation

The Fixed Percentage Compensation method is a sub-method of the Percentage
Compensation method. It lacks the variety and high adaptability to project
characteristics of the classical percentage compensation. This method is known
from countries where by government decree the architects compensation is
always xx% of the construction cost, disregarding parameters like type of building,
complexity of the task and level of the total cost. Measured by usual professional
standards this method may be regarded as a curiosity. It lacks all characteristics
the world-association of architects holds indispensable for an appropriate
compensation calculation method.

5. Lump Sum Compensation

The lump sum compensation method is not an independent method in its own.
The architect usually uses one or several of the methods 1. - 4. to develop the
lump sum. These methods have only an auxiliary function and do not become
part of the contract.
With this method contract provisions for the compensation of special or additional
services that occur in the course of the project process are of especially high
importance.
a. This method is as transparent as the method used for the formation of the
lump sum.
The auxiliary method is here often of only secondary interest to the client. His
main interest is the final definition of the compensation at an early stage.
Under these provisions this method is very transparent.
b. The adaptability and flexibility to changing project parameters is very poor.
The basic idea of this method is, that such adaptability and flexibility is not
necessary. Therefore contract provisions for the case of changing project
parameters and the compensation of the additional services are of especially
high importance.
Adaptability and flexibility towards changing economic and professional
conditions are only of interest in connection with the method used for the
formation of the lump sum.

PPC –Guideline Compensation – Appendix 1 - page - 5 -

 c. The use of this method is as simple or as difficult as the method used for the
formation of the lump sum. The definition of the lump sum at an early stage is
a special challenge to the responsibilities of the architect with regard to the
economy of his office.
d. The characteristic of this method is that the final compensation is fixed at an
early stage, which can be an advantage, especially for the client.
e. This method has no specific necessary preliminary expense for its
development.
See 1.–4.
f. The comparability between countries with the same pattern of the architects
missions is reduced to “less or more” – without any deeper background.
g. A completely and correctly described planning task leads to different
compensations from market participants.
The method complies with competition law.
h. The average client cannot judge, whether the lump sum is appropriate or not.
Considering that the client knows at an early stage, what he will have to pay
this method is sufficiently consumer friendly.

6. Commercial Compensation Negotiation

The standard criteria do not really fit this method, indeed it would even be
unlawful or unprofessional in some legislations. However it has obvious
commercial attractions to both parties since it shares benefits and risks.
Profit share of the value generated to the client (risky business).
Here the architect has to maximize the value generated to the client to get a
maximum compensation. This can cause a conflict of interest between the public
good and the interests of the client (especially in commercial developments)
because the architect may have to concentrate on the quantity to generate profit
instead of quality of the built environment.
On the other hand this method opens the chance for a distinctively over average
increase in value through an outstanding architectural quality.
(see also Appendix IV. Reflections on Incentives)

PPC –Guideline Compensation – Appendix 1 - page - 6 -

 Appendix - II -
to the Recommended Guideline for the Accord Policy on the Development of Architects Compensation
Overview on existing Cost Information Systems / Fee Scales / Methods for Calculation of the Architects Compensation
Presented by the UIA Professional Practice Commission Status: 9/30/2010 *
* The current status shows all infomation deductible from the UIA PROFESSIONAL PRACTICE DATABASE at the date stated under "status".
An update on the UIA member section's respective data is under way in 2013.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
CIS / Fee Scale developed by it is Standard Calculation Method for Architects Compensation Differentiation by

Time Charge Compensation

Building / Project Type List

(based on historical data h / m²)
Professional Organistaion

Time charge, Proj. Type + Size

Construction Cost related

Compensation (based on
Compensation (Fee / m²
Consumer Organisation

historical data % of CC)

(de facto working time)

Lump Sum Negotiated

CIS / Fee Scale exists

Complexity Bands /
Finishing Standard
related Compensation

Floor Area related

Legislative Body

non mandatory

Other Method
mandatory
Other

Other
UIA MEMBER SECTION
001 Afghanistan
002 Andorra 1 1 1
003 Angola
004 Argentina 1 1
005 Armenia 0
006 Australia 1 1 1
007 Austria 1 1 1 1 10x3
008 Azerbaijan –

Page - 1 -
Overview on existing Cost Information Systems / Fee Scales / Methods for Calculation of the Architects Compensation
Presented by the UIA Professional Practice Commission Status: 9/30/2010 *
* The current status shows all infomation deductible from the UIA PROFESSIONAL PRACTICE DATABASE at the date stated under "status".
An update on the UIA member section's respective data is under way in 2013.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
CIS / Fee Scale developed by it is Standard Calculation Method for Architects Compensation Differentiation by

Time Charge Compensation

Building / Project Type List

(based on historical data h / m²)
Professional Organistaion

Time charge, Proj. Type + Size

Construction Cost related

Compensation (based on
Compensation (Fee / m²
Consumer Organisation

historical data % of CC)

(de facto working time)

Lump Sum Negotiated

CIS / Fee Scale exists

Complexity Bands /
Finishing Standard
related Compensation

Floor Area related

Legislative Body

non mandatory

Other Method
mandatory
Other

Other
UIA MEMBER SECTION
Estonia
009 Baltic Countries: Latvia
Lithuania
010 Bangladesh 1 1 1
011 Barbados
012 Belarus 0
013 Belgium 0
014 Benin 1 1 1
015 Bolivia 1 1 1
016 Bosnia-Herzegovina
017 Brazil 1 1 1
018 Bulgaria
019 Cameroon
020 Canada 1 1 1 1 145 7x3
021 Cape Verde
022 Chile
023 China 1 1 1
024 Colombia
025 Congo (Republic of) 1 1
026 Costa Rica 1 1 1
027 Cóte d'Ivoire
028 Croatia 1 1 1
029 Cyprus

Page - 2 -
Overview on existing Cost Information Systems / Fee Scales / Methods for Calculation of the Architects Compensation
Presented by the UIA Professional Practice Commission Status: 9/30/2010 *
* The current status shows all infomation deductible from the UIA PROFESSIONAL PRACTICE DATABASE at the date stated under "status".
An update on the UIA member section's respective data is under way in 2013.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
CIS / Fee Scale developed by it is Standard Calculation Method for Architects Compensation Differentiation by

Time Charge Compensation

Building / Project Type List

(based on historical data h / m²)
Professional Organistaion

Time charge, Proj. Type + Size

Construction Cost related

Compensation (based on
Compensation (Fee / m²
Consumer Organisation

historical data % of CC)

(de facto working time)

Lump Sum Negotiated

CIS / Fee Scale exists

Complexity Bands /
Finishing Standard
related Compensation

Floor Area related

Legislative Body

non mandatory

Other Method
mandatory
Other

Other
UIA MEMBER SECTION
030 Czech Republic 1 1 1
031 Dem. Rep. of the Congo
032 Ecuador 1 1 1
033 Egypt 1 1 1
034 Ethiopia
035 France 0
036 Georgia 1 1 1
037 Germany 1 1 1 1) 1 5
038 Ghana
039 Greece 1 1 1
040 Honduras 1 1 1
041 Hong Kong 1 1 1
042 Hungary 1 1 1
043 India
044 Indonesia
045 Iran (Islamic Rep. of) 1 1
046 Ireland 1 1 1
047 Israel 1 1 1
048 Italy 1 1
049 Japan 1 1 1
050 Kazakhstan
051 Kenya
052 Kuwait

Page - 3 -
Overview on existing Cost Information Systems / Fee Scales / Methods for Calculation of the Architects Compensation
Presented by the UIA Professional Practice Commission Status: 9/30/2010 *
* The current status shows all infomation deductible from the UIA PROFESSIONAL PRACTICE DATABASE at the date stated under "status".
An update on the UIA member section's respective data is under way in 2013.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
CIS / Fee Scale developed by it is Standard Calculation Method for Architects Compensation Differentiation by

Time Charge Compensation

Building / Project Type List

(based on historical data h / m²)
Professional Organistaion

Time charge, Proj. Type + Size

Construction Cost related

Compensation (based on
Compensation (Fee / m²
Consumer Organisation

historical data % of CC)

(de facto working time)

Lump Sum Negotiated

CIS / Fee Scale exists

Complexity Bands /
Finishing Standard
related Compensation

Floor Area related

Legislative Body

non mandatory

Other Method
mandatory
Other

Other
UIA MEMBER SECTION
053 Kyrghyzstan
054 Lebanon
055 Luxembourg
056 Macao
057 Malaysia 1 1 1
058 Mali
059 Malta 1 1 1
060 Mauritius 1 1 1
061 Mexico 1 1 1
062 Mongolia
063 Morocco
064 Namibia 1 1 1
065 Netherlands 1 1 1
066 Netherlands Antilles 1 1 1
067 New Zealand 1 1 1
068 Nigeria 1 1 1
Denmark
Finland 0
069 Nordic Countries: Iceland
Norway
Sweden 0
070 Pakistan
071 Palestine 1 1

Page - 4 -
Overview on existing Cost Information Systems / Fee Scales / Methods for Calculation of the Architects Compensation
Presented by the UIA Professional Practice Commission Status: 9/30/2010 *
* The current status shows all infomation deductible from the UIA PROFESSIONAL PRACTICE DATABASE at the date stated under "status".
An update on the UIA member section's respective data is under way in 2013.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
CIS / Fee Scale developed by it is Standard Calculation Method for Architects Compensation Differentiation by

Time Charge Compensation

Building / Project Type List

(based on historical data h / m²)
Professional Organistaion

Time charge, Proj. Type + Size

Construction Cost related

Compensation (based on
Compensation (Fee / m²
Consumer Organisation

historical data % of CC)

(de facto working time)

Lump Sum Negotiated

CIS / Fee Scale exists

Complexity Bands /
Finishing Standard
related Compensation

Floor Area related

Legislative Body

non mandatory

Other Method
mandatory
Other

Other
UIA MEMBER SECTION
072 Philippines
073 Poland 1 1 1
074 Portugal 1 1
075 Puerto Rico
076 Republic of Korea 1 1 1
077 Romania 1 1 1
078 Russian Federation 1 1 1
079 Saudi Arabia
080 Senegal
081 Serbia and Monténégro 1 1 1
082 Singapore 1 1 1 1
083 Slovakia 1 1 1 1
084 Slovenia 1 1 1 1
085 South Africa 1 1 1 1 1 1
086 Spain 1 1 1
087 Sri Lanka
088 Sudan 1 1 1
089 Switzerland 1 1 1
090 Syrian Arab Republic
091 Tajikistan
092 Thailand
093 FYRoM
094 Trinidad & Tobago 1 1 1

Page - 5 -
Overview on existing Cost Information Systems / Fee Scales / Methods for Calculation of the Architects Compensation
Presented by the UIA Professional Practice Commission Status: 9/30/2010 *
* The current status shows all infomation deductible from the UIA PROFESSIONAL PRACTICE DATABASE at the date stated under "status".
An update on the UIA member section's respective data is under way in 2013.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
CIS / Fee Scale developed by it is Standard Calculation Method for Architects Compensation Differentiation by

Time Charge Compensation

Building / Project Type List

(based on historical data h / m²)
Professional Organistaion

Time charge, Proj. Type + Size

Construction Cost related

Compensation (based on
Compensation (Fee / m²
Consumer Organisation

historical data % of CC)

(de facto working time)

Lump Sum Negotiated

CIS / Fee Scale exists

Complexity Bands /
Finishing Standard
related Compensation

Floor Area related

Legislative Body

non mandatory

Other Method
mandatory
Other

Other
UIA MEMBER SECTION
095 Tunisia
096 Turkey 1 1 1 1
097 Uganda
098 Ukraine
099 UK of GB + North. Ireland 0
100 United Rep. of Tanzania
101 US of America 0
102 Uzbekistan 1 1 1
103 Viet Nam
104 Zambia
Total 53 19 37 0 3 14 32

1)
Fee scale in Germany is only mandatory for architectural services provided by persons (not necessary architects) residing in Germany

Page - 6 -
Overview on existing Cost Information Systems / Fee Scales / Methods for Calculation of the Architects Compensation
Presented by the UIA Professional Practice Commission Status: 9/30/2010 *
* The current status shows all infomation deductible from the UIA PROFESSIONAL PRACTICE DATABASE at the date stated under "status".
An update on the UIA member section's respective data is under way in 2013.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
CIS / Fee Scale developed by it is Standard Calculation Method for Architects Compensation Differentiation by

Time Charge Compensation

Building / Project Type List

(based on historical data h / m²)
Professional Organistaion

Time charge, Proj. Type + Size

Construction Cost related

Compensation (based on
Compensation (Fee / m²
Consumer Organisation

historical data % of CC)

(de facto working time)

Lump Sum Negotiated

CIS / Fee Scale exists

Complexity Bands /
Finishing Standard
related Compensation

Floor Area related

Legislative Body

non mandatory

Other Method
mandatory
Other

Other
UIA MEMBER SECTION

TEMPORARY MEMBERS
105 Bahamas
106 Belize
107 Brunei Darussalam
108 Central African Republic
109 Chad
110 Fiji
111 Malawi
112 Mauritania
113 Niger
114 Rwanda
115 Sierra Leone
116 Sao Tome and Principe
117 Suriname

Page - 7 -
Overview on existing Cost Information Systems / Fee Scales / Methods for Calculation of the Architects Compensation
Presented by the UIA Professional Practice Commission Status: 9/30/2010 *
* The current status shows all infomation deductible from the UIA PROFESSIONAL PRACTICE DATABASE at the date stated under "status".
An update on the UIA member section's respective data is under way in 2013.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
CIS / Fee Scale developed by it is Standard Calculation Method for Architects Compensation Differentiation by

Time Charge Compensation

Building / Project Type List

(based on historical data h / m²)
Professional Organistaion

Time charge, Proj. Type + Size

Construction Cost related

Compensation (based on
Compensation (Fee / m²
Consumer Organisation

historical data % of CC)

(de facto working time)

Lump Sum Negotiated

CIS / Fee Scale exists

Complexity Bands /
Finishing Standard
related Compensation

Floor Area related

Legislative Body

non mandatory

Other Method
mandatory
Other

Other
UIA MEMBER SECTION

Explanations

Column
1 + 2 Running no. and name of member section
1 = YES
3 - 15 0 = NO
– = no information available
4 - 7 Only the organisation / authority in charge is stated even if other parties participated in the development
10 - 15 Only the standard method is stated = 1, even if other methods are in use as well
10 Compensation by de facto working-time, retrospectively
11 Compensation by working time, based on collection and evaluation of historical data, related to project-type and -size (scales h / m²)
12 Floor-Area related Compensation (Fee / m²)
13 Compensation in % of construction cost, differentiated by project-type and -size, based on collection and evaluation of historical data
14 Lump sum negotiated between contract parties
15 Other compensation method than in 10 - 14
16 -18 Extent of differentiation is stated by no. of listed building types / complexity categories and sub-categories (e.g. 7 x 3)
16 List of building- or project-types, often allocated to complexity category in 17
17 Complexity-categories, sometimes subdivided in simple, average, complex
18 Other differentiation than in 16 and 17

Information marked yellow needs clarification (contradictory data from the database)

Page - 8 -
Calculation of Hourly Rates in Architects Offices
Basis : Total Expense Personnel Surplus on net expense for building up an investment reserve: 4.80%
Surplus on net expense for risk + profit: 10.00%

a b c d e f g h i k l m n o p q r s t u
Project % of tot. % of tot. Social % of ind. % of tot. Calc. Ent. % of tot. Material % of tot. Risk/ % of net Investm. % of net Hourly % of gross
No. Name h/year h Salary € sal. Expense € salary soc. exp. Salary € ent. sal. Expense € mat. exp. Net Exp./h € Profit € cost/h Reserve € cost/h Rate € salary / h
1 Architect 1 1,464 16.67% 48,750.00 27.17% 11,895.00 24.40% 25.30% 13,515.58 16.67% 22,625.08 16.67% 66.11 6.61 10.00% 3.17 4.80% 75.89 227.92%
2 Architect 2 1,098 12.50% 20,800.00 11.59% 5,746.00 27.63% 12.22% 10,136.68 12.50% 16,968.81 12.50% 48.86 4.89 10.00% 2.35 4.80% 56.09 296.11%
3 Architect 3 1,464 16.67% 37,700.00 21.01% 9,464.00 25.10% 20.13% 13,515.58 16.67% 22,625.08 16.67% 56.90 5.69 10.00% 2.73 4.80% 65.32 253.67%
4 Techn. Empl. 1 1,536 17.49% 29,250.00 16.30% 7,605.00 26.00% 16.18% 14,180.28 17.49% 23,737.78 17.49% 48.68 4.87 10.00% 2.34 4.80% 55.89 293.47%
5 Techn. Empl. 2 1,536 17.49% 23,400.00 13.04% 6,318.00 27.00% 13.44% 14,180.28 17.49% 23,737.78 17.49% 44.03 4.40 10.00% 2.11 4.80% 50.55 331.82%
6 Secretary 628 7.15% 13,650.00 7.61% 4,173.00 30.57% 8.88% 5,797.67 7.15% 9,705.29 7.15% 53.07 5.31 10.00% 2.55 4.80% 60.92 280.28%
7 Apprentice 1,056 12.02% 5,850.00 3.26% 1,807.00 30.89% 3.84% 9,748.94 12.02% 16,319.73 12.02% 31.94 3.19 10.00% 1.53 4.80% 36.66 661.83%
8 Total / Median 8,782 100.00% 179,400.00 100.00% 47,008.00 26.20% 100.00% 81,075.00 100.00% 135,719.55 100.00% 49.94 4.99 10.00% 2.40 4.80% 57.33 280.66%

30.09.2010 / Sven Silcher

Recommended+Guideline+Compensation_Appendix+III_calculation+of+hourly+rate - Total Personnel