Practice Management - Amber Book

the contractor is responsible for ...

"perfection" in construction, nothing outside the contract, paying and coordinating sub-contractors, providing owner with operation manuals, some design of specific systems (delegated design) for things like curtain wall details, concrete framework, and steel fabricator shop drawings

1. chargeable rate 2. billable revenue 3. direct salary expense multiplier

1. chargeable rate= what the client pays the firm for an hour of your time 2. billable revenue= payment from the client for billable hours 3. direct salary expense multiplier= the multiplier that determines what is charged to the client (direct salary= $50/hr., expense multiplier = 4.0, client charged $200/hr.

types of project delivery contract structures

1. design-bid-build 2. design-bid 3. integrated project delivery 4. construction manager as agent 5. construction manager as advisor 6. construction manager as constructor 7. bridged design-build

common types of small business taxes

1. federal and state income tax 2. self-employment tax 3. personal property tax

what do yo duo if an exam question asks you which firm employee to assign to a project?

1. look for a staff member who has experience in the building program type. 2. then, from those, find ones with the lowest utilization rates. 3. from there, which makes more sense based on experience and the task at hand.

municipal bonds vs. revenue bonds vs corporate bonds

1. municipal bonds are loans, made by investors, to a gov. 2. revenue bonds are municipal bonds issued to finance facilities for revenue-producing public enterprises. (for example, a gov. issues a bond for something that makes money on its own, like a stadium or a toll bridge) 3. corporate bonds: private companies also issue bonds to borrow money for building projects (or to finance ongoing operations, hire employees, pay down debt or support R&D) The value of a bond is based on the credit-worthiness of the issuer, the length of the bond, and the interest rate of the bond relative to the going bank interest rate at the time.

public project process and qualities of winning bids

1. rfp 2. kickoff 3. contractor questions and answers 4. sealed bids 5. all bids are opened at once 6. choice is made quality: 1 - lowest responsive bid (bidder followed the bidding rules and accounted for everything in the drawings/specs when bidding a price 2 - lowest responsible bid (bidder has the financial and technical wherewithal to build the project to a minimum quality, on time)

rules for unpaid interns

1. similar experience to education 2. must benefit intern 3. intern doesn't replace anyone and is monitored closely 4. no advantage or some disadvantage to firm 5. no guarantee of job afterwards 6. intern and firm are explicit that there is no salary note that while there is no AIA ethics rule against firms engaging unpaid interns, NCARB does maintain a stance against unpaid interns.

surety bond, bid bond, and performance bond

1. surety bond: a type of insurance policy that the owner requires the contractor to purchase to be eligible to bid for, or work on, the project. it pays the owner to compete the project if the contractor walks off the job. surety bonds come in two common flavors, bid bonds and performance bonds. 2. bid bond: contractor A wins the project by bidding $500,000, which is far lower than any of the others. contractor b submitted the next lowest bid, bu this bid was much higher at $800,000. as contractor A learns more about the project in preparation to build it, she discovers that she missed a passage in the specs stipulating that the ice cream factory must remain open, making product, during the entirety of the factory renovation. no wonder the next lowest bid was so much higher! realizing that she is contractually bound to conduct the renovation for only $500,000 while still maintaining a clean enough environment for food, she's sure this project will bankrupt her construction company. she thusly walks away from the project, leaving the owner-who just completed an onerous, expensive, and time-consuming bidding process- to find a new contractor. in this case, the bid bond that the owner required all the bidders to purchase will pay the owner the difference: the extra $300,000 needed to hire contractor b at the $800,000. the owner is made whole because he gets his building, as laid out in the bidding documents, for $500,000 out of pocket plus the $300,000 that the bid bond insurance policy pays out. 3. performance bond: contractor B, who was required by the owner to purchase a performance bond when he signed the contract, is 90% through the ice cream factory renovation when the construction company owner dies. his children engage in a bitter struggle with one another to take control of the company that dad left behind. this leaves contractor B unable to complete the project in a reasonable time frame; brother take sisters to court to hash out succession plans in the construction business while the cranes on site languish. the performance bond, insurance required by the owner before the contract was signed, and purchased by the builder, then pays the owner $80,000 to complete the final 10% of the project, ensuring that the owner gets the ice cream factory renovation that he was promised, for the price that he was promised.

the architect is responsible for...

1. the project being on time 2. the instruments of service 3. the standard of care and protecting the health, safety, and wellness of the public 4. coordination and administration of project team and processes 5. enforcement of contract terms 6. adherence to applicable codes 7. NOT means and method of construction, existing site conditions, safety on the job site, anything outside the contract (additional services)

name common causes for construction delays? who is at fault for each?

1. unexpectedly bad weather (normal weather days are built into the schedule, no one at fault if that number is exceeded) 2. change orders caused by the owner or architect (who are at fault) 3. contractor behind schedule because they are building too slow (the owner can require overtime at contractor's expense to catch up)

how do you choose whom to staff to a project?

1. utilization rate (low rate means they have time to give to the project; high rate means they are already busy with another billable project) 2. experience/ expertise/role 3. does the architect have a license in the state?

1. utilization rate 2. revenue factor

1. utilization rate: direct salary expense/base salary (also known as billable or chargeable rate). if amber earns $100,000 peryear and 70% of her hours are charged to the client, her utilization rate is 70%. 2. revenue factor: utilization rate x direct salary expense ratio . if the firm charges the client $3 for each dollar it pays amber, expense ratio is 3.0. revenue factor is .7x3.0 = 2.1

What are the levels of a Corporation?

Stakeholders, Directors, Officers

is it unethical for an architect to offer free services?

it is not unethical for an architect to offer free services. the aia used to be in the business of establishing fees, outlawing discounts, and regulating when an architect could submit a bid to undercut the fee established by another firm. they took this role to protect the profession from a "race to the bottom" whereby architects would undercut one another on price ad infinitum - but those protectionist policies ran afoul of antitrust laws. the federal gov. deemed that practice to be too much like a cartel, and contrary to the free-market tradition of competitive bidding.

contractor's "cost of work" includes

materials, labor, profit, overhead. this is especially important to define up front if the architect's fee is based on a percentage of cost of work.

mechanic's lein

mechanic's lein: a claim placed against owner's property due to unpaid debts. used when the contractor fails to pay sub-contractors but can also be used when the owner does not pay the architect. the land and building can be sold to settle the debts if the owner can't pay cash.

AIA A201 general conditions

outlines the site and project specific conditions that modify the project from the typical. *includes legal modifications

construction manager as constructor

owner contracts with Architect and CM (who also acts as the builder) at the same time. *This type of project is the least risky for the owner, most risky for the CM, and has higher speed and cost. The final price (GMP) is known by the end of SD. Because of the speed and increased authority of the CM, the Architect must maintain a stricter process of quality control

who owns the drawings for a project?

the architect owns the instruments of service - at all phases; the architect grants the owner and contractor a "limited license" to build the project. unless the architect agrees (and typically is paid for it), the owner can't simply re-use the drawings for her next new Pilates studio*. *the architect can sell the rights, if the new architect indemnifies the old. the owner can also get the right to use the drawings if the architect is terminated for cause.

an architecture Billings index (ABI) of 48 in "inquiries" means

the financial future outlook for architects ticked down last month by a very small amount. the ABI is a running monthly number: an economic indicator for construction activity. A number more than 50 means the financial outlook improved over last month; a number below 50 means the financial outlook declined relative to last month. there are separate ABI numbers for Billings, new design contracts, and inquiries... for residential, industrial, public, and commercial sectors.. and for the Midwest, northeast, south and west regions of the US.

owner wants a new architect

the owner can fire architect without cause (for convenience), though has to pay work-to-date, including overhead and profit. the architect can't transfer the project to another architect because first architect got too busy to finish. each party is responsible for sharing concerns as soon as possible.

construction manager as agent

the owner contracts with the Construction Manager who acts as his agent and contracts with the Architect and Contractor. *this option is less risky for the owner than the cm as advisor route, gives more authority to the cm, and greater completion speed with a greater cost.

the building structure fails. why doesn't the owner sue the structural engineer?

the owner doesn't have a contract with the structural engineer. the owner has a contract with the architect and the architect, has a contract with the structural engineer. there is a "chain of command" for liability, accountability, and communication. owner sues architect for damages, architect sues structural engineer to recover those damages.

you own a firm and provide life insurance to your staff as a benefit of employment. is that benefit taxable?

the premium (monthly cost) of the first $50,000 of life insurance is not-taxable, but after that, the rest is subject to tax. the employee will then pay some tax on large life insurance plans. wages, salaries, and bonuses are considered taxable income. many benefits, like child care nd contributions employees make to health insurance plans may to be subject to taxes.

strategic alliance

the temporary sharing of technology, resources, and risk to get and build a project. this uses a teaming agreement to lay out credit, copyrights, non-competition clauses, roles, etc. unlike a joint venture, two companies didn't establish a new, third, company. and unlike a partnership, the two companies haven't merged into a single company. they went into the strategic alliance as two companies and came out of it as two companies.

how many times does an architect need to goof before they are disciplined by the profession?

there is no hard minimum number of lapses. instead, trouble arises after failing to "demonstrate a consistent pattern of reasonable care and competence" and like so much else in an architects liability portfolio, that bar to clear is established by "standard of care" norms: other architects practicing in the same locality at the same time.

common project delivery methods

Design-Bid-Build: Unless told otherwise, assume that the ARE is asking you based on this "vanilla" option. Design-Build: A single contract between the owner and a design-build firm employing architects and contractors (or joint-venture entity owned by architect and contractor) IPD: Integrated project delivery. Catch-all category for one-off teamwork-focused contracts where owner, contractor, and architect share the financial risks and rewards of a completed building. Construction Manager: A powerful entity, hired by the owner and answering directly to her, who may serve as a consultant in an advisory role, a legal representative of the owner who hires the architect and contractor, or a one-stop-shop for both advising the owner and then constructing the building. It may seem like the project delivery options are both prescribed and limited in choices. . . because they kind of are prescribed and limited. . . If that feels strange to you, read on (but you have my permission to move onto the next card if the selection of contracts available feels "normal" to you.) By constricting the legal formats available to a small number of options, the AIA contracts can legally protect everyone with a relatively small number of owner-architect-builder agreements, updated regularly to account for new developments in the field (BIM, LEED) as they arise. If every possible legal structure were on the table for every project, basic contract templates could not possibly cover all the options and expensive lawyers would reinvent the wheel for each project, negotiating over little details, while the parties schemed to unscrupulously take advantage of unforeseen loopholes in the fine print. With a limited number of contracts, when disputes arise, there is established case law tied to that particular contract flavor and a process of revising the next iteration of that contract template to address the most common disputes so that they won't need to be settled in the courts going forward. Who gets to decide when there is a new project delivery method available? Generally, the owners do through their collective market power. If you were making an upright-walking species from scratch, you would design it with two spines instead of one, and human frames would be more the shape of a capital H. But because we evolved from beasts that walked on four legs, we were stuck with the single spine that worked best for them. Now many of us suffer from back pain because of that start-from-what-we-already-have process. It's similar evolutionary expediency with the AIA contracts, where what is available is as much a reaction to what was available before than what would be absolutely optimal now. Design-bid-build held a position as the default for a time, but construction took too long and involved too many adversarial parties so the design-build contract option was born. Buildings got complicated and owners were taking too much risk with too little information, so contracts with a construction manager were invented. The owners were happy to give the construction managers more risk for more profit upside so the AIA invented new contracts, each giving the construction manager more responsibility. Finally, BIM allowed all the parties to make a change to a living-breathing digital drawing set, a new generation of entrepreneurial architects emerged who didn't see being a developer as selling out, and some grew tired of the adversarial relationship that the existing contracts fostered between architect, contractor, and owner. . . so the AIA developed IPD contracts. Each contract type evolved from what came before it, but each retained the evolutionary baggage associated with incremental change. And each existing contract type, by virtue of its legacy status, is updated and maintained in perpetuity so as not to waste a lot of past effort and settled case law (and not to waste a marketplace of owners with inertia, content to use the contract type that worked out well last time).

lifecycle cost analysis includes and excludes... and differs from Life Cycle Assessment because...

(LCCA) life-cycle cost analysis: the evaluation of the cost of, for instance, boiler systems in a building from installation to replacement. includes the cost to install, plus the predicted cots: fuel to run, cost to maintain, salvage value after the useful life has concluded, and considers how long one system is expected to last as compared to another. boiler A costs less to install but more to operate; boiler B costs more to install but less to operate. LCCA attempts to identify which boiler choice offers a better value, accounting for inflation. useful for a fuller accounting of value beyond simple installation cost comparisons. LCCA explodes sunk costs ( like if two boilers cost the same in design fees and pipe installation, those will not come into play) *not to be confused with Life Cycle Assessment (LCA) which serves as a sustainability tool

what is quality management in architecture?

(QM): intentional and formal process of developing and revising the instruments of service and internal firms systems. For instance, establishing how many cycles of redlining and revising drawings each project will have, or how many times per month the project architect will check in with the client by phone during design. (Also called quality control (QC).

1. assets 2. liabilities 3. balance 4. equity

1. assets: everything owned by a business that is cash or easily converted to cash 2. liabilities: everything owed by a business 3. balance: assets-liabilities 4. equity: same as balance (also known as net worth)

AIA B101 requires which insurances? And for what?

1 - General Liability - Covers the physical office space 2 - Professional Liability - Covers errors and omissions 3 - Workers' Compensation Insurance - Covers employee injuries or illness - medical care and lost wages 4 - Automobile Liability - Covers company vehicles and personal cars used for business purposes 5 - Employers' Liability - Covers employers if they get sued for causing a workplace injury (works together with workers' compensation) - settlements, court costs, legal fees

1. Fair Labor Standards Act 2. Davis Bacon Act

1. Fair Labor Standards Act: regulates minimum wage, overtime pay, and child labor 2. Davis Bacon Act: Contractors working on federal construction projects must pay workers no less than the locally prevailing wages

What is the process to file an ethical complaint against an architect?

1. File the complaint through AIA National 2. Advisory board and chair will be chosen 3. Pre-hearing, hearing, start, claim, defense, end, judgment* *Confidential, no counter-claims, can't fine or enforce behavior, but can admonish/suspend

1. Net Profit 2. Net Billing 3. Profit Earnings Ratio 4. Prospect/Suspsect

1. Net Profit - Profit before tax and distributions to firm owners, but after paying wages and bills 2. Net Billing - Billing that only covers fees for architect's labor 3. Profit Earnings Ratio - Profit/ Net Operating Revenue (defines the health of the business) 4. prospect and suspect - potential projects with >51% (prospect) or <50% (suspect) chance of income generation

The owner is responsible for...

1. Pre-existing site conditions (geological, hazardous materials, surveying) 2. Paying Contractor 3. Paying Owner's subs 4. Change orders 5. With or without cause hiring and firing of Architect

profit-loss statements include: utilization rate, overhead rate, break-even rate, net multiplier, and profit-to-earnings ratio what are each of these metrics?

1. utilization rate: if 65% of a firm's hours are billable to a client for design services, and the remaining 35% accounts for unbillable time and registration fees spent on things like attending AIA conferences, than its utilization rate is 65% lets assume that our firm pays its architect a generous $100/hr 2. if our firm spends $150 on non-billable expenses (like the AIA conferences) for every $100 it spends on staff salaries for billable client work, than we say that our overhead rate is 1.5 3. break-even rate: in the example above, for every $100 we pay in direct (billable time) salary, we need to charge the client $250 to cover both the $100 staff salary and the $150 overhead. we then get a break even rate of 2.5. break even rate always equals overhead rate + 1.0 4. net multiplier: if we charge the client $300 for the $100 we paid our architect, our net multiplier is 3.0. 5. profit-to-earnings ratio: our profit is $50 for every $300 we charge the client. 50/300=17%

how do you decide how much to charge a client?

1. value pricing - based on quality 2. effort pricing - based on time spent (this is the ARE's assumption in the exams) 3. % cost pricing - based on percentage of total construction cost 4. fixed fee pricing - fixed cost to client typically derived based on triangulating estimates of the other three models

risky contract language

1. warranty 2. guarantee 3. indemnify/indemnifcation 4. "highest" standard of care 5. as required/as necessary 6. hold harmless 7. *anything that passes liability to the architect

What type of damages can be pursued in litigation? Which are called for in AIA B101? Consequential vs. liquidated vs direct damages

1.consequential damages - estimated cost of lost owner profit due to project delays (planned potential profit had my lemonade stand been open in time for the summer rush). The contracts prohibit all parties from recovering consequential damages 2. liquidated damages - per-day penalty for a delayed construction project completion, agreed upon at the beginning. The A101 Owner-contractor agreement allows for liquidated damages (which in construction are almost always related to per-day-late penalties); The b101 owner-architect agreement forbids claims based on liquidated damages, so the owner may not file a claim against, or withhold payment from, the architect for each day late. above all, the AIA documents hold the architects blameless. 3. direct damages - actual cost of fixing unacceptable work (maximum allowed is = the architect's fee). the owner may pursue a claim for the cost of repairing the leaky foundation from either the contractor or the architect , or both.

1.s-corp 2.c-corp 3.b-corp

1.s-corporation: small or large company without public stocks - single taxed. personal property protected from client lawsuits. good option for an architecture firm. 2. c-corporation: large company with public stocks - double taxed 3. b-corporation: company with goals beyond profit-seeking ; environmental or social mission, as well as making money.

AIA agreement types by letter prefix

A series: owner-contractor; contractor-subcontractor;sureties B series: owner-architect C series: architect-consultant; IPD D series: miscellaneous E series: specialty projects, services, and processes G series: project management and administration

AIA Documents: A701; C401; A305; G701; G702; G704

A701 - Instructions to Bidders C401 - Architect-Consultant Agreement A305 - Contractor's Qualification Statement G701 - Change Order G702 - Application and Certificate of Payment G704 - Certificate fo Substantial Completion

base design-bid-build contracts

AIA B101 - Owner-Architect Contract AIA A101 - Owner-Contractor Contract

add alternate vs. unit pricing vs. allowance

Add alternate: The owner may want an outdoor pool as part of his hotel project, so he's curious about the extra cost. Once he's defined the extra cost, he'll put that in his spreadsheet to confirm that the pool will pay for itself in extra nights booked. You will design a hotel and add a pool to the drawings; in the bidding documents, you'll make clear that the pool is an add alternate and that bidders will offer two cost numbers: one for a pool-less hotel option, and a second that includes the add alternate pool. Unit pricing: The owner will be building a hotel, but has not yet decided on its size. He needs a solid price for the hotel (without the rooms. . . just the lobby, restaurant, laundry facilities, etc.) plus a unit price for each hotel room. That way, the owner can analyze market data and effectively study feasibility against the cost of building to a certain number of rooms. After the schematic design phase, you, as the architect, can give him a cost estimate of $4.2 million for the base hotel with 40 rooms, plus a unit price of $290,000 additional for each hotel room. Now he can talk to his investors and market research people to decide the optimal size for his hotel armed with specific knowledge about the unit price of each extra room. Unit pricing works best for repetitive elements in a project (street lights, an array of barns for aging whiskey) where the owner wants to buy time before committing (to gather financing for extra landscaping that isn't yet in the budget, to determine if the public's interest in consuming bourbon is permanent or just a passing fad). It also works for elements that are easily quantifiable (earth excavation, linear feet of site-cast concrete retaining wall), also when the owner wants to buy time before committing to an amount of something. Unit pricing does not work well with complex elements of projects (for instance, if an owner would like to buy time before committing to a building form. Allowance: Options for TV model availability change rapidly with advancing technology, so you don't yet select a specific television model for the hotel rooms, knowing that the hotel won't be completed for another 2.5 years. You'd rather wait and pick out a TV model then. But leaving the televisions out of the drawings invites the contractor to fleece the owner in a future change order for all those TV wall mounts. You need to get the mounts into the contract up front, while the owner has negotiating leverage, so you ask for an allowance for TV mounts. The contractors' bids then come back to the owner with the TV mounts accounted for, even though model numbers aren't in your specifications. The winning bid includes an allowance for $40,000 for all TV wall mounts, provided the television weighs less than 55 pounds and there is no special wiring required. Now, with the allowance already in the contract, as long as a "normal" TV is selected by the owner, the contractor can't jack up the price later when the owner is desperate to complete the campus-adjacent hotel before college football season begins. The allowance must always include all costs: parts, labor, taxes, delivery to the site, etc., so the owner won't be surprised by a bill for taxes, labor, and delivery charges during construction, and the owner can properly evaluate all the contractors' bids on equal footing. If one contractor's bid included he cost of the mounts but didn't include taxes, labor, or shipping-but the other bids did include those elements- it would be difficult to compare different bids as "apples-to-apples." Just for the TV mounts the difference between the bids that are all-inclusive and the bids that are for parts-only could easily be tens of thousands of dollars!

Aggregate Limit, Premium, Deductible, Claim

Aggregate Limit - total coverage amount Premium - monthly/yearly bill Deductible - maximum paid by you, prior to coverage kicking in and paying the remainder Claim - you think you experienced a covered event and demand payment from the insurance company

who contracts directly under the Architect and who contracts under the owner?

Architect: MEP, Lighting Consultant, civil engineer (utilities, land contouring, and all things related to the improvement of the land with the new building), landscape architect/ engineer, cost estimator, code consultant Owner: zoning, traffic, site, geotechnical (underground), surveyor, civil engineer (for duties related to permitting, and documenting the existing condition of the site)

what is "responsible control"?

As the licensed architect, you can stamp the work if you achieved responsible control; and you have achieved "responsible control" over a drawing set (including specs, reports, etc.) if you possess a knowledge of, or maintain supervision over, that set consistent with the standard of care. In other words, you can stamp plans that you didn't create, but you can't stamp plans you know little about. How much do you have to know about the set before you can ethically stamp them? Enough to be consistent with what other architects in your area are doing for similar projects (that's the "standard of care" part).

cash basis accounting vs accrual basis accounting

Cash basis accounting - You have $1,000 in the bank. In cash-basis, it makes no difference that tomorrow you will receive a large check from a client, nor that the next day you will pay your structural engineer with another large check. Account only for the $1,000. Accrual basis accounting -You have $1,000 in the bank, but now you account for the $100,000 check you will receive tomorrow from your client, as well as the $10,000 check you will pay your engineer the day after. From an accrual basis point-of-view, there are separate lines for the money you have, the money you're about to get, and the money you're about to pay out, but you have a total of $1,000+$100,000-$10,000=$91,000 accounted for on the spreadsheet. For obvious reasons, the accrual basis accounting method allows you to make intelligent decisions in guiding your business in a way that cash basis doesn't. If you're weighing whether to hire a new intern for the summer, and need to start the interview process, it's better to think about the $91,000 that you'll almost certainly have in the bank the day after tomorrow, than to make that hiring decision based on the $1,000 you have in the bank today. Cash basis is what you will use to calculate your taxes. If today is December 31, you pay taxes on the profit that you made this calendar year. . . that $100,000 that will be deposited tomorrow from your client and the $10,000 you'll pay the day after to your engineer: those go into figuring out next year's tax liabilities and don't show up on this year's "cash basis" books.

Tail insurance

Covers the architect's projects after the architect's retirement. The insurance is liability insurance for the projects the architect has already done prior to retirement which are still within the relevant statutes of limitations/repose - so that should there be a problem resulting in a lawsuit, the retired architect is still covered. Tail insurance is much cheaper than the insurance carried by a professional, practicing architect, because the risks are more defined and limited for the insurer - since the architect has retired, no new projects will be built, and all of the projects that need to be covered by the tail insurance are know.

Employment Practice Liability Insurance: Intellectual Property Insurance:

Employment Practice Liability Insurance: Insurance to protect from wrongful termination Intellectual Property Insurance: Insurance to cover claims based on copyright/ intellectual property infringement

Standard of Care

Expected quality of service for architect by area. The standard of care often decides whether architect is at fault when Architect made an error or omission.

Who are the most common ethics complaints?

Other architects, homeowners

Mediation vs. arbitration vs. lawsuit

Laid out in B101, either: Mediation -> Arbitration (not always cheaper, often ends in 50/50 settlements) -or- Mediation -> Court System (can be cheaper, fairer, and faster, but is also public)

LLC

Limited liability company -separates personal assets from company assets; protects personal assets from client lawsuits -small to medium sized company -file with state (for this and any corporation) Filing as an LLC is a good option for a new architecture firm

Format types for specifications

Masterformat: classifies by material: concrete, masonry, metals, etc. (older format, more commonly used). Uniformat: classifies by system: substructure, shell interiors, etc. (newer format, better for BIM)

Does the architect have a fiduciary duty to the client: a legal obligation to act in the owner's best financial interest?

No, architects do not serve as an owner's fiduciary. Fiduciary duty: the obligation a professional has to act in the best interests of the client.

OSHA

Occupational safety and health administration: enforces workplace safety regulations for things like construction falls, exposure to dangerous construction solvents, potentially dangerous power tools, and requirements for neon safety vests, glasses, & hardhats on site. OSHA considers office workplaces, like architects' offices, to be low-hazard but requires reporting of workplace deaths or multiple simultaneous workplace hospitalizations, even in offices.

overlay district vs. planned use development

Overlay district: additional zoning requirements for a defined area of town, regardless of the underlying base zoning classification. For instance, for fear of mudslides, the buildings along a bluff, whether zoned for residential, commercial, or industrial, are required to obtain a geotechnical soil report before permission to build is granted. Overlay districts might utilize additional zoning rules to establish historic districts in older parts of the city, protect wildlife in eco-corridors, or promote density along a light rail transit line. Planned use development (PUD): Change in the zoning/code for a specific plot in exchange for other good building practices or public amenities (the city council must approve the PUD). This often grants the developer more zoning flexibility in large-scale, mixed-use land development. For example, a developer interested in purchasing 175 acres currently zoned only for single-family detached homes hires your firm to design a walkable neighborhood replete with shops, schools, street trees, parks, and sidewalks. You then present the proposal to city council to allow the shops in what is currently residential-only zoning. If approved, the municipal government will allow the shops in exchange for the street trees, parks, and sidewalks. They sign off on your plan and will draw up a contract ensuring that you abide by the spirit of it, in exchange for the new zoning flexibility.

Retainer

Regular services for a fixed fee, more efficient than hourly over the long term... like if a university is regularly updating rooms as all projects, they might hire an architect on retainer. The architect then can bill the university for the work completed, without having to create a new contract for each door that is replaced.

expertise vs. experience vs. efficiency firm structures

expertise: exceptional talent or deep knowledge. ie. Pritzker Prize winners. experience: special programmatic areas, routine but complex, challenge to match task to experience level i.e. data centers efficiency: inexpensive, repeatable, routine, lots of junior staff. I suspect most of the work done by these "efficiency" firms will be outsourced abroad per the next decades because if you plan to win projects based on your low fees, it will be difficult to compete with overseas labor cost.

do business as a sole proprietor or as a limited liability corporation?

for someone with the liability exposure of an architect, an LLC or S-corp is almost certainly the best option for operating a business. as a sole proprietor or partnership, and you get sued, the winner can take your personal assets.

aged accounts receivable

how many days, on average, between when our firm sends a bill to its client and when we receive the payment from that same client. if its more than 90 days, you're waiting too long

examples of supplementary services

These go beyond the standard owner-architect contract, so you'll charge an additional design fee. They can be enumerated and a fee may be estimated BEFORE design and are therefore we call these SUPPLEMENTAL services. Offering more than one design option Certified designs (LEED, etc) Fast-track BIM coordination Interior design, or furniture, fixtures & equipment (FFE) Post occupancy evaluations Existing facilities survey A/V or security design More than anything, the list above (and more similar items listed in the contract) let the owner know what the architect will not be doing under a standard agreement without compensatory extra fees. That way, when an owner asks later for LEED or a post-occupancy survey, all parties will understand that this is an extra topping on the pizza, and as such, requires an extra fee. Separately, the list below also goes beyond the standard owner-architect contract, so we'll also charge an additional design fee. But this list CANNOT be enumerated or anticipated so a fee may NOT be estimated BEFORE design and are therefore we call these (and charge for these hourly as) ADDITIONAL services. For instance, Amazon initiated same-day delivery to our area, changing the retail market midway through the design process, and the owner asked for a re-design to accommodate smaller retail shopping mall. Or the municipal body that green-lights the project is requiring unforeseen convincing that necessitates slick renderings of the project that weren't part of the contract. Or a new CEO is hired and she wants to see a physical basswood model of the project before construction begins. Or other unforeseen events that require an architect, who has already signed the B101, to put in more effort than reasonably expected relative to the contract. Typically the hourly fee for additional services-whatever they may be-is worked out in the original B101 contract and typically the architect must receive permission from the owner before commencing paid additional services. As you might imagine, the AIA has a form for requesting that permission: G801-Notice of Additional Services. All of this is to say, when an owner hires an architect, she cannot expect an all-you-can-eat buffet of services. Yes, every project is different, and there's a fuzzy grey area associated with the boundaries of the architect's responsibilities. . . but, while sometimes fuzzy, boundaries DO exist.

what rules do you, as an employer, need to follow? name everything you can before you flip the card

With more employees, your firm is subject to additional regulatory hurdles to protect workers 0-15 employees: FLSA, I-9, HIPAA, ERISA, Equal Pay Act, OSHA, Worker's Compensation, Minimum Wage 16-50: add COBRA*, ADEA, ADA, Civil Rights* (*20+) 50+ : add FMLA, Obamacare, EEO Reporting, Affirmative Action FSLA = Fair Labor Standards Act. Minimum wage, overtime pay, child labor laws. I-9 = employment eligibility verification. are your employees legally permitted to work in the US? HIPAA= Health Insurance Portability and Accountability Act. Protects privacy of employee health information. You can't tell one employee that another employee is suffering from gout. ERISA = Employee Retirement Income Security Act. Sets minimum standards for retirement and health plans. For instance, the person who manages the retirement plan must act as a fiduciary (puts the best interest of the plan above their own self-interest) Equal Pay Act = Prohibits wage discrimination by gender OSHA = Occupational Safety and Health Administration. Protects employees from workplace injury. Worker's compensation = gives those injured at work wage replacement and medical treatment COBRA = you lost your job that came with health insurance? you divorced your spouse or your spouse died and you were covered on her health insurance plan? COBRA allows you to temporarily pay out-of-pocket to stay with your old health insurance until you can find a new plan. ADEA = Age Discrimination in Employment Act. Prohibits age discrimination against those 40 and older. you may discriminate against someone for being too young! why? young people don't vote so congress doesn't pass laws to protect them. Civil rights = Civil Rights Act. Protects workers against discrimination on the basis of race, color, religion, gender, and national origin. As of 2020, this also includes sexual orientation. most people don't know that you can often legally fire someone for any other reason not included above: if you don't like the color of an employee's shoelaces, you may be able to legally fire them for that. and the first amendment protects citizens from government punishment based on speech, but not from employment action. so you can fire someone for saying something offensive or stupid (unless you work for the gov.). FMLA = Family Medical Leave Act. Allows employees to take unpaid, job-protected leave for family and medical reasons (birth, adoption, military deployment) Obamacare = Affordable care act (ACA). Large employers must offer affordable health care insurance as an option to those working 30+ hours per week. EEO Reporting = Equal Employment Opportunity. Employer reports hires by race and gender. For 100+ employees. Affirmative Action = employers must recruit and advance qualified minorities. women, veterans, and persons with disabilities.

contractor license bond

a surety bond (insurance) that protects against contractor breaking construction laws

net revenue per employee

if we charged our clients $300,000 this year and we had three total employees, our net revenue per employee would be $100,000 (a good goal for a healthy firm). the higher this number is, the healthier the firm is because a high number means that it is bringing in a lot fo money from clients but has few employees to pay.

Basic services

instruments of design SD, DD, Bid, CD, and CA, cost estimation, and coordination Budget and schedule management code and utilities mechanical, electrical, plumbing (MEP) engineering and structural engineering Everything else (programming, acoustical consultant, marketing materials, etc.) is considered a supplemental service or an additional service... with an additional up-charge fee.

what are the instruments of service?

instruments of service include pretty much everything the architect created for the project, including the final CD set and specifications ... but also the site analysis, notes, study models, environmental review documents, cost estimates, sketches, early versions of the design that were abandoned.. all the creative work, tangible and intangible.

net operating revenue

all money we've taken in from clients, minus what we've paid out to consultants (engineers) and what we've paid out for reimbursables (our cost for travel to the site, which was charged to the client, but now we have to pay for that travel from the money we collected) net operating revenue is the money (net revenue) we have left over 1. pay our architects to draw (direct expenses) 2. pay our utilities (indirect expenses) 3. pay our partners (profit)

are architects agents of the owner?

architects are not agents of the owner. the agent creates a legally binding relationship between third party and principal, for instance in a CM as Agent project, the principal is the client and the Contractor is the third party.

balance sheets

at the scale of an individual, your paycheck tells you how much you are making (your income) and your bank account describes what you've saved (your wealth). similarly, at the scale of your firm, its profit-loss statement lays out what the firm is making in profit (its. income) and the balance sheet describes what the firm owns (its wealth) the balance sheet includes: solvency = current assets/ current liabilities liquidity = expected assets/ expected liabilities leverage = liabilities/equity return on equity = profit/equity assets=things your company owns liabilities=what your company owes equity=the net worth of the business, were it to be sold today

base vs direct vs indirect salary

base salary: total annual compensation direct salary: salary derived from billable hours indirect salary: salary from non-billable hours

tort claim

claim made due to injury

types of bids

competitive: lowest immediate cost negotiated: owner selects a (single) trusted contractor and they negotiate a price to build the museum. greater speed and quality, but obviously more expensive because the owner has given up the option to benefit from competitive pricing invited: competitive bid with specifically qualified contractors proposed: the owner negotiates for best quality out of the lowest four bids

what building typology carries the most risk?

condo projects and single family residential projects b/c condo board has a propensity for suing architects for noisy floors, harsh sun, landscaping, etc.

how long does a contractor's warrantee last?

contractor's warrantee typically extends one year, but can contract for longer* *or until statute of limitations/repose runs out (for work that doesn't conform to the contract)

contractual liability insurance

contractual liability insurance: covers you when something goes wrong and you, by virtue of contract you signed, are held responsible for it. Contractual liability coverage typically is included in your general liability insurance (the one that covers your business for non-professional incidents)

professional liability insurance

covers the cost of mistakes made by the Architect, as well as disciplinary, regulatory, and administrative expenses (Also called "errors and omissions" insurance)

general liability insurance

covers the physical property of the firm, usually has a limit to total claims (landlords can require this insurance)

schedule performance index

earned value/planned value. determines project schedule and efficiency. For example a project has a budgeted design cost of $100,000. that's how much the owner plans on paying the architect for the entire project in total. According to the schedule you've created. 20% of the project should have been completed after 2 months. 20% = $20,000.. that is the "planned value". ideally, you're firm has worked $20,000 worth of time on this project after two months, and if it has ideally your firm has invoiced and been paid $20,000. But after 2 months, your firm has put $30,000 worth of time into the project. this kind of schematic design creep is not uncommon, and it means some hard choices are ahead: put less time in at the end (CD or CA) because you've run out of hours to devote to this project or put more time into the project than you budgeted (and will be paid for). which endangers the financial health of the firm because you're donating unmilled extra design hours to the client. alternatively, you may charge the client for the extra hours, but they won't be happy with a blown design budget. Because you planned on $20,000 worth of work at this point, and you've put in $30,000 worth of work, the Scheduled Performance Index=Earned Value/ Planned Value So Schedule Performance Index=$30k/$20k = 1.5 A Schedule Performance Index great than 1.0 means that you've put too many hours in, relative to where you are in the project timeline. A Schedule Performance Index less than 1.0 is also a problem. if you've only put $10,000 worth of hours into the project, your Schedule Performance Index = 10k/20k = 0.5 So you're either behind schedule because you haven't devoted enough hours to the project or low on quality for not putting enough design muscle behind this project as it moves forward. Your target, therefore, is a Schedule Performance Index equal to 1.0, where the earned value = the planned value. Planning correctly, keeping track of this in real time, and adjusting staff responsibilities as needed to stay at 1.0, is tedious but necessary.

bridged design-build

owner contracts with a design architect ("bridging consultant") to design the project through SD, then a "reduction architect-contractor team" bids to develop the documents and build the project. this contract retains some fo the adversarial relationship between the architect and contractor because the bridging consultant (design architect) works for the owner and has her best interest in mind; and it retains some fo the speed and expediency associated with design-build projects because the production architect and contractor work for a single entity and ostensibly trust one another without the blame-shifting or cover-your-ass culture associated with design-bid-build. the bridging consultant continues to review the production architect's drawings after the hand off, on behalf of the owner, to ensure the the design architect's intent was followed through to detailing and technical specs. *this type of project increases quality, lowers risk, and offers greater speed than design-bid-build (but less speed than design-build). not good if the owner needs to have the architect "on her side" throughout the whole process.

design-build

owner contracts with an architect-contractor team. *this project type lowers risk and cost to owner, while increasing speed, but has the potential for lower quality, as the Owner has no agent. for instance, the light fixtures that were specified are no longer available from the manufacturer. the builder wants to replace the light fixtures with those of comparable material expense, but slightly inferior ones that require less labor to install because the replacement fixtures don't hide the low voltage transformers in the basement the way that the original ones had. the owner may not have the wherewithal to recognize the new fixtures as inferior. if the architect and contractor are a team hired together by the owner, there is less incentive for the architect to call out the contractor's replacement fixture as inferior.

design-bid-build

owner contracts with the architect to draw, and then the contractor who bids a fixed price based on those drawings. *this project type is linear and clearly defined, with the lowest immediate cost, a longer schedule, and a higher chance of large change orders. due to the change orders risk, the drawings need to be more complete earlier in the process *this was, for a long time, the most common type of contract and serves as the default option assumed in the ARE unless otherwise specified

construction manager as advisor

owner contracts with the architect, contract, and CM *this type of project brings the CM on as early as a consultant for the Owner, typically a CM with expertise in a specific market (like performing arts centers). this allows for greater speed

negotiated select team

owner hires the contractor she likes from the beginning of the project, before drawings are completed (or even started). this project style is a subset of design-bid-build. *this option allows for fabrication to start early on completion parts of a project (ie. special curtain walls) by including the contractor from the beginning. it also ensures a quality project: the contractor was selected because of her craftsmanship, integrity, professionalism, etc. not because she had the lowest price. offers greater speed and quality than basic design-bid-build but is obviously more expensive because there is no bidding.

who pays for the bid bond?

owner requires the bidders to purchase their own bid bonds.

integrated project delivery

owner, architect, and contractor each take ownership in a fourth business as an integrated team, pooling resources and sharing risks and benefits. the goal is not only to work collaboratively and share ownership, but to also reduce waste. and to reduce inefficiencies. by opening up communication and incentivizing collaboration, less time will ostensibly be spent hunkering down, and more time can be spent huddling up. *this type of project is usually used for large and complex projects and works especially well with BIM. IPD is above all else, flexible. each project sets its own system of rewards and penalties, its own financial structure, and its own teams.

Phasing

phasing: construction can be planned as a series of stages, rather than as one continuous effort 1. helps with complex systems: especially common if the owner needs to stay open during construction. 2. helps with uncertain funding: to make sure that a portion of the project is occupiable, even if funding dries up before the whole thing is completed. pros: lower initial investment so less initial risk; income can be generated by the portion of the restaurant that is open during construction cons: the total project will take longer to complete; more expensive to bring cranes to the site twice, route construction deliveries out of sight of diners, etc.; must maintain security, cleanliness, and worksite safety to meet both the needs of the construction site and the restaurant operation

post-occupancy evaluation

post-occupancy evaluation: surveys used to see how well a building is performing, usually administered at least a year after occupancy

current earnings

profit left over after taxes and expenses are deducted from income

AIA Code of Ethics

review code of ethics.

subrogation

subrogation: process of the insurance company assuming agency for an insured party in order to sue another party. BUT the AIA A201 requires a WAIVER of subrogation by all the relevant parties. meaning by contract, the insurance company must still pay the insured, but may not go after the others in the group to recover what the insurance company paid out.

when is a project late: after the substational completion date or after the final completion date?

substational: ready for move-in, sets the deadline for a late project, start of the warrantee period final: punch list is fully complete

if the owner-architect contract stipulates that the architect's fee will be 7% of construction costs, and the project is abandoned after CDs (and therefore has a construction cost of $0), is the architect entitled to payment?

the architect is paid, even if the project isn't constructed, because the contract is based on the "owner's budget for the cost of work" not the "cost of work" from the contract: 'the architect shall be entitled to compensation in accordance with this agreement for all services performed whether or not the construction phase is commenced"

1. Stipulated Lump Sum 2. fixed fee + expenses 3. percentage of construction cost 4. hourly to a maximum + expenses 5. hourly - open-ended (no established maximum) + expenses 6. fee per unit/sf + expenses

these 6 are the most common ways that architects will be paid. which flavor used is usually determined by that the owner wants. 1. stipulated lump sum : fixed price for owner and fixed fee for architect. don't use if scope, responsibilities, or task assignments aren't clearly defined. if architect works too many hours, she loses money on the job; if she works too few, she makes more profit and owner is fleeced. everyone must trust one another 2. fixed fee + expenses: with or without a cap limit on expenses 3. percentage of construction costs: if labor or materials were donated to build the project, their value should be included in calculating construction cost 4. hourly to a maximum + expenses: just what it sounds like 5. hourly - open-ended (no established maximum) + expenses: just what is sounds like 6. fee per unit (or fee per sf) + expenses: typically only used in residential design *public sector projects will almost always be stipulated lump sum or percentage of construction cost *private sector will use any of these *some of these terms are also used to describe options for how the owner pays the contractor

can an architect contribute to a campaign of a local politician in the hope of winning a contract to design a new firehouse, should that politician become elected?

tough call.. but probably okay. architects are prohibited from offering payments or gifts to public officials with the intent of influencing the official's judgement related to a juicy building project. but that rule does not apply when making legal campaign contributions!

what kinds of employee hours apply toward utilization rate?

utilization rate includes only billable labor (time spent on the project and billed to the owner): 1. red-lining 2. drawing 3. design meetings 4. site visits 5. coordination/CA excludes all firm management and marketing labor

can you fire an employee because you don't like the color of their shoelaces?

yes, you can fire for any reason provided it is not the employee's race, gender, national origin, disability, religion, or genetic information, or sexual orientation. or for age (if over 40). harassment is both illegal and subject to discipline within the profession, and includes offensive slurs, offensive jokes, unwanted physical contact, insults, petty slights, and interference with work performance.

can you, as the architect, stamp the work of consultants?

you may stamp the work of a licensed consultant, if you have, "reviewed it, coordinated its preparation, or intend to be responsible for its adequacy"