Giorgio Marfella 2:55
So good morning and welcome everybody.
My name is Giorgio Marfella. I'm the chairperson of the Architects Registration Board of Victoria and I'm here to present.
And launch speakers for today's CPD webinar series.
Which is titled a deep dive into the systemic into systemic risk in the Australian sector and in particular this will be one of a series of.
Webinars that we will launch in a in a few months that is stemming from a research report that the ARBV has prepared.
In and released a few months ago.
Before commencing the webinar, I would like to commend begin by acknowledge, the traditional owners of the land of the Wurrungeri people, and I wish to pay my respect to the eldest, past, present and emerging and and also other Community, so who may be joining us today here.
So the the scope of today is to take you through one of four.
Fix that. We will be exploring through the years that as I anticipated, they they come from the results of a research report that we prepared in collaboration with the NSW Architects Registration Board and at this point I can simply introduce the speakers of today. The first one is Dariel De Sousa, who's the principal at DART Consulting and part of the presentation will also be our principal architect at the ARBV.
Isabel Ledger. So I will hand over to Dariel now and I'll come back to conclude and moderate some questions and answers as they may come over to you, Dariel.
Dariel De Sousa 4:44
Thanks so much Giorgio. So before we get into the substance of the presentation, just a couple of housekeeping matters.
Attendance at this webinar will qualify you for one formal CPD point, so throughout the course of the seminar you will be presented with a series of questions and multiple choice options. You will be prompted to respond to each of the questions, the system, the app using the QR code.
And also the link that will be put in the chat.
We'll immediately tell you whether or not you've got the answer correct or not. We'll have a brief discussion about the question and the appropriate answer, and then you will be sent a record of your attendance at the conclusion of this seminar. So if you have any questions about the process, please post them in the chat and our assistant will help you out.
So I'm going to start with some background.
The research that Giorgio has just mentioned to you, which forms an important backdrop for our discussion of client architect relationships and agreements during this seminar.
The research is a focused on addressing systemic risks facing architects and the Australian architecture sector. So the question arises, what are systemic risks and why is the ARB concerned about them?
So let's start with the concept of risk itself. There are many definitions of risk, but at all of the the essence of all of the definitions is that it expresses uncertainty about adverse outcomes that could materialise in the future. So moving now to the concept of systemic risk, systemic risk is risk that can extend across a sector. In the case of the architectural sector in Australia, it can compromise.
Architect's ability to comply with their professional standards obligations.
And it can cause widespread harm to clients, users, the public and architects themselves. Now systemic risk may be difficult to address because they may be latent, and the harm may not have yet materialised it they may be difficult to identify in advance in the absence of good quality information and intelligence, which basically enables trends to be detected.
And there may be too widespread for the regulator to address all at once, or at least without the assistance from other bodies.
So as Giorgio mentioned, the ARB and the NSW ARB joined forces to try and tackle systemic risks. Together, the joint Research project has three main purposes. The 1st is to identify key current emerging and future systemic risks facing the architectural profession in Australia, and this in turn will enable the ARB and NSW ARB to better target their proactive regulatory activity. And this session is part of that proactive regulatory activity to encourage voluntary compliance.
Help prevent harm from materialising and also to support architects to navigate systemic risks themselves while discharging their regulatory obligations. Now there are two main streams of work that have been undertaken by the AR BS to date. The 1st is a report that was published by the ARBS in late 2022 entitled Systemic Risks in the Australian architecture sector.
This report largely is a desktop review of reports of literature of government information, as well as anecdotal information available to the ARBV and NSW RB to identify systemic risks that appear to exist within the Australian architecture sector. Now in 2024, the arts again joined forces to produce a deep dive report into systemic risks in the Australian architecture sector.
And the purpose of this second piece of work was really to test the desktop research that was done in the 2022 report. It involved insights gained from focus groups involving a broad range of sectoral participants from both Victoria and NSW.
Now it's important to note the purpose and the composition of the focus groups to really help contextualise the findings that we'll be discussing.
In this seminar, so as I mentioned, the focus groups were designed to interrogate the desktop review that was conducted in 2022. There are a broad range of sectoral participants, including architects and industry bodies, clients and users of architectural services, developers and builders, building surveyors, insurers and brokers, academics and government agencies, and other regulatory bodies. And then primary reason for congregating all of these.
Different stakeholder groups together was to try and understand systemic risks from different perspectives. There were four themes that were identified in the initial report, and really.
A. A deep dive was conducted into them in the four in the focus groups that were conducted late last year. They dealt with client architect relationships and agreements. The topic that we're talking about today, DNC procurement, NCC compliance and disruptive change, and these are the four themes that we'll cycle through.
Over the next 12 months to share the findings from the Deep dive report.
Now important context as well as we're progressing through the discussion today is to understand the systemic lens that the arts utilised when undertaking their research, basically using a systemic lens involves moving away from the detailed micro level cases that can cross the ARB. These desks on a day-to-day basis and really zooming out and taking a helicopter view of the sector as a whole to identify macro or systemic issues that apply across the sector.
And as I've already mentioned, the core systemic risks that were identified in the initial report and really confirmed in the deep dive report were client architect relationships and agreements, DNC procurement, NCC compliance and disruptive change. So and we're talking, as I mentioned about client architect relationships and agreements today. So before we get into the detailed discussion of client architect relationships and agreements, I just want to briefly.
Touch on the regulatory context, as you already are no doubt aware, the ARB is the regulator under the regulatory framework comprising the Architects Act 1991 and the Architects Regulations 2015, including the Code of Professional Conduct. The regulatory framework together with the arts regulatory activity help to ensure that architects comply with their professional standards obligations.
And this in turn helps to protect clients, users and the public from harm. The ARB undertakes 3 main types of regulatory activities, registration and approvals, which basically involves only allowing those that meet the eligibility criteria in terms of qualifications and competence to call themselves architects and provide architectural services, proactive regulatory activity which is designed to encourage voluntary compliance.
And to detect and prevent harm from materialising and then in the event that non compliance does occur, reactive regulatory activity which is designed to respond to non compliance to mitigate harm that has eventuated or may eventuate and these three sets of regulatory activities help to protect clients, users and the sector as a whole. So let's move now to the detailed discussion and primarily focusing on the findings in the Deep dive report.
Start with some general observations about client architect relationships.
Successful client architect relationships are essential for the following interrelated reasons. First of all, they help to foster effective communication so that clients needs in terms of time, cost, design, and final built outcome are well understood.
Effective relationships help to ensure alignment between the client's vision.
And the ultimate design.
And effective relationships help to build mutual trust, respect and confidence between the architect and the client. And there are various aspects of the client architect, architect relationship that are regulated under the Code of Professional Conduct, including the way architectural services are provided, the way architects communicate with their clients, the agreement between the architect and the client and aspects of the fee arrangements between the architect and the client. And we'll be delving into each of these facets moving forward.
But I just wanted to start with a discussion about some of the factors that the focus group participants identified as having the potential to undermine effective client architect relationships. There are numerous factors that were identified and you can go to the detailed a deep dive report to read about them all, but I'll just note a couple of important ones. The 1st is the misalignment or potential misalignment that can occur between the design expectations of.
Between at the architect and the client, but about the brief and the final design, competing views between the architect and client can destabilise the client architect relationship.
Reference was also made to inadequate skills and expertise on the part of the architect. It was noted that sometimes architects may not have the right skill set to undertake all facets of a project or fail to alert the client when extra skills are needed.
Reference was made to ambiguity of roles and responsibilities which can arise in complex multi party projects and in can lead to confusion and poor relationships, including between the architect and the client. Reference was also made to onerous and unfair contractual obligations that can be imposed on architects. Reference was made to fee arrangements that may not be transparent about cost escalation.
Variations at the point was also made that ineffective and inefficient. Communication can occur particularly from.
Lack of clear lines of communication or failure to communicate in a transparent, open and honest manner at all times and lack of detail in design documentation that can lead to defective building. Finally, so as you can hear, get a sense of from all of these factors there are many factors, many factors that can undermine a successful client architecture relationship.
Starting right at the process of procuring architectural services right to the pointy end of delivering the design and ensuring compliance of the design at the end of the project. As you can tell from some of the factors that I've referred to, some of the factors within the architect's control such as the way in which they communicate, the way in which they detail their designs, but some factors may be linked to procurement processes and may be outside architect's control.
And the implication of some of these findings is that architects could benefit from more guidance as to how to effectively address factors that are within their control and broader sectoral engagement is needed to address factors that are outside of their control. And I'm going to pass now to Isabel, who will share some of her practical insights on a number of these factors.
Isabel Legge 17:34
Thanks, Dariel. So I'm just going to talk through those points that Dariel's just brought up. So for I think for misalignment of design expectations, this can be fairly easy to do. You take the clients functional brief and then you move through the project into a direction that you want to take it.
And this may or may not align with your clients expectations. Some clients like to be challenged whereas others don't. And then this can sometimes lead to a question of whether or not you want to. You're happy to compromise that design in order to maintain that client relationship.
This will obviously depend on your priorities. I think it can be worth considering interviewing your clients before commencing your project to see whether they're a good fit, and this can be especially helpful when it comes to single residential projects, so inadequate skills and expertise I think.
Most officers will have.
A.
Will undergo a risk analysis before they start each project asking questions like do we have the right personnel to undertake this type of project? Do we have the right resource resources? Have we done similar projects before and the right and do we have the right experience with this project?
I think.
And if not, what will we need to do to meet their obligations? Meet the clients obligations. If we were to undertake this project?
You may need to look at taking on new staff, or you might need to refuse the project completely if we don't have the right skills for that project.
Ambiguity of roles and responsibilities. I think this comes up a lot.
In I mean it probably comes up more in large complex projects with multi party relationships where or where with relationships might change to novation. How it can still be relevant to small projects as you may be dealing with clients who are new to construction, it is important that you are you clearly define your roles and responsibilities.
Early on and that you do not blur this kind of understanding by taking on responsibilities outside your role. If it's not work, you should be undertaking, make sure you clarify your role and then refer your clients to the appropriate consultants. So engagement for partial services. This is probably less of an issue if you're engaged for the early stages of concept design and design development. From a risk point of view, the risk of the areas probably falls to where the design will actually be done in meet your architectural expectations.
However, if you do work on documentation and not engaged for construction services, then the quality of your documentation is pretty crucial.
This is where a lack in a lack in design documentation and compliance with regulations could result in large cost variations to the clients and also liability to you as the architect.
Unfair contractual obligations. These are kind of more common in large scale projects where the clients provide bespoke contracts. This can impose unfair contractual terms on the architects and uncapped exposure to liability, goes without saying for entering into a project.
Make sure you seek legal advice on the contract and that you understand that that you understand the terms and conditions of that contract. So unclear fees, arrangements and variations to fees. It's important that your clients understand your fee structure.
How cost? How cost escalation escalated over time and what will result in a variation to the fee. This will become a bit more later, but in short be upfront about what constitutes additional work and how you will be charging for it. It's not uncommon for clients to claim that they weren't aware that that something was an extra cost and architects end up doing work for free.
Or the clients are unhappy that they have to pay back to work inefficient and ineffective communication. This comes up a lot in the complaints that are made to the Architects Registration Board we hear about architects who have completely stopped to talk, communicating with their clients. They might refuse to answer the phone, or they might take months to respond to emails. And this can even be one of the projects on site. It's best to be timely, transparent, open and honest in your communication with your clients.
Take good records to refer back to lack of detail in the design documentation and regulatory compliance. So some architects rely on limited design documentation to mitigate risk. How this may ultimately increase your exposure and could result in a breach of your professional standard obligations. In contrast to this, when it comes to good relationships, it's good client relationships. It's good to remind your clients that there will always be some.
General emissions or errors and potential variations once projects on site, even with your best intentions and due diligence, there will be something that slips through the cracks. If your clients understand this from the outsource, this will help mitigate the stress this can cause and help them to prepare for any extra costs that they might incur.
I'm taking also talking about contingency early and revisiting this throughout the life of the project is a good as we're used to all, so that will bring. So that's that. So that brings us to question one.
Which Darius got up, which is about what which factors that could undermine the client architect relationship are clearly outside the architect's control. So give you a little bit of time to have a look at that and think about that and then we'll, yeah, and then we'll sort of discuss the answer.
So I think this is a fairly easy one I think. So the answer is D which is none of the above because I think that we can all agree that now understanding the design and the documentation working for the client's brief with the client and also your own skills and expertise, it's all part of your responsibility.
So I will hand back to Dariel and she will.
Dariel De Sousa 24:13
Thanks, Isabel. So just to round off the discussion about this aspect of about factors that can have an adverse impact on client architect relationships, some of the recommendations in the deep dive report, including a recommendation for industry bodies to provide CPD that really help architects implement strategies to ensure effective management of client architecture relationships in the context of different procurement processes and to publish guidelines.
A guidance and case studies to illustrate how well managed our client architect relationships can be achieved, including the management of factors within architects control as well as how to address factors that are outside of their control and recommendations to education and training bodies.
To basically enhance education around architects, roles and responsibilities, to provide clarity in the context of different procurement models, and again to help architects with strategies to overcome challenges that could could arise in the context of different client architect relationships.
So let's move now to the next aspect of client architect relationships, an important one which relates to communication. Now obviously, effective communication is absolutely essential in any successful client architect relationship. It helps to strengthen the relationship and build trust. It means that the clients needs will be well understood. It helps to make decision making easier. The risk of disagreement is reduced and it's more likely at the end of the day that the client is satisfied and the project.
Is successful.
Communicate aspects of communication between the architect and client are also regulated under the regulatory framework, amongst other things, architects must provide information to their clients that is accurate and unambiguous. They must provide information with reasonable promptness to their clients to ensure that clients can make relevant decisions in an informed way, and they must notify their clients of circumstances that could prevent them from providing services.
So here are this slide relates to factors that can affect communication and undermine communication between architects and and clients. And as you can see, a key finding from the deep dive report is that communication between clients and architects is actually multifaceted and bidirectional. And I I'll explain what I mean by that in a moment. There was general agreement among the focus group participants about the importance of communication. Good communication.
Establish an effective architect and client relationship. Reference was made to this multifaceted nature of communication. The fact that communication involves oral communication between the architect and the client, drawn communication through the designs and also written communication emails and reports, et cetera, that are provided by the architect to the client. The scope, the form and the content of communication may change as a as a project progresses.
And the point was also made that communication really needs to be tailored to the client. In each case, it was also suggested in the focus groups that while architects may have strong skills in communicating aspects of the design, they may find communicating issues around project delivery more complex, particularly if there are complex multi party relationships at play. And if lines of communication of communication between the architect and the client are not clear.
Reference was also made to the mutuality of the client architect relationship and the bidirectional nature of communication, that is, that clients need to listen to architects too. But this implies that architects need to be strong advocates so that clients are more inclined to listen to them. And this in turn means that there needs to be a good fit at a personal level between the architect and the client and the right person needs to be in the room so that the client can.
Be influenced by the architect.
You can see, as I've said in this slide, architects again are likely to have strong skills in communication, but the focus groups indicated that there's scope for improvement in relation to other aspects of a project, and the implication is that more education and training is needed about all aspects of communication, particularly in relation to project delivery. So I'll hand back to Isabelle now to share some of her practical perspectives on this issue.
Isabel Legge 29:11
Yeah. So this is gonna address factors that could compromise effective communication between architects and clients. And this brings us back to the kind of unclear roles and responsibilities as discussed earlier. Who does what, who's responsible for what under the agreement, should be clear from the outset. This may mean that you need to remind the clients throughout the project of your role, your roles, their roles, and the roles of other stakeholders. Sometimes providing the client with a summary before the commencement of each stage can assist the clients to understand where the project is at.
What comes next?
Any decisions they might need to make in that next stage?
Inadequate. Another one is inadequate client briefs, so putting together a client brief can be an onerous task. Some clients have a clear understanding of what they require, whereas others need more guidance. The more detailed and specific debrief, the easier it is to understand the stand the client's vision, requirements, constraints and expectations for the project. Providing briefing questionnaires to the clients can be useful and can provide and providing a return brief client sign off can also be really valuable.
Updating the brief as a live document is also something that you can incorporate into practise.
And finally, make sure you clients have a realistic budget that matches their brief.
And so unclear context and manner with which communication will be undertaken. So all kinds of different and tailoring communication to individual clients. Communication styles is important, but it is also important to set your own parameters for communication when and how you will communicate with the clients and why you need to communicate decision making in writing.
It may be helpful to follow up written communication with a phone call or vice versa.
Unclear and vague communication and or irrelevant and unhelpful communication. Be clear and concise with your communication. Less is more. Try to always start with the most important information first. What is the purpose of the e-mail? Is the e-mail simply providing an update or does it require the client to make a decision? Provide all necessary information, options, risk, etcetera. Relating to the purpose of the e-mail and then finish with what happens next. If the clients need to provide.
A decision let them know how to provide that decision and also by where.
I'm clearing in adequate timelines for delivery. Be true to your deadlines.
Provide realistic timelines for the delivery of a project, or only take on projects you have the capacity to deliver and also communicate any changes to delivery time early.
Under promise and open it up, communicate often and make sure your clients are regularly kept into the loop about how the project is tracking. Even if there is nothing much happening.
This will help to mitigate any stress and friction caused by any delays.
Inflexibility and unresponsiveness to clients use this. Can this can cause quite a bit of tension, so a collaborative approach design process is imperative to prevent successful project outcome. Architects, however, are often accused of not listening to the client's views. Take the time to carefully listen to your clients, ideas, concerns and perspective on the project.
The project is ultimately for them, failure to be upfront and frank with clients. Architects can be reluctant to give bad news and this can add tension to the relationship. It can be hard to communicate cost, blow outs, time delays and to admit that you may have missed something. And in case of a ladder, probably not advised by your insurance.
It should be handled delicately. A phone call is usually softer than an e-mail. However, the longer you wait to let clients know, the more likely they are to be frustrated by the situation.
In saying this, it is also worth.
Making sure you understand what the problem is clearly and also think find some solutions to the problem. So prepare one or two more. One or more solutions.
Before you give them a call this way, you are not only informing them of the problem, but you're always also providing them with a way forward, right? And that brings us to our next question.
So which aspects of communication between an architect and client is not covered by the regulatory framework?
To give you a little bit of time for this one.
And I just wanted to remind people about the Q&A link if you haven't already got that. So you can use that to answer these questions and you'll need to answer that in order to get your ccpd meet your CPD requirements. All right. So the answer to this question is all of the above. So obligations to keep clients informed about project developments, obligations to respond to clients, requests for information and accuracy of information provided to the client, architects to clients, all of these.
Obligations will be found in the text code of conduct, so if you're not familiar with that, I suggest you get familiar with that particular document right. I will hand back to Mario for the next section.
Dariel De Sousa 35:07
Thanks, Isabel. Just to close off discussion of this topic, amongst the recommendations in the Deep dive report were included the recommendation that the ARB and NSW do more CPD on the content of the communication obligations and clearly this session is part of implementing that recommendation and also a recommendation to education and training providers to provide more information and guidance to architectural students as well as architects about the types.
Scope and content of architects communication obligations.
To their clients. So moving along now to client architect agreements. Now these agreements, they may seem as a bit of a technicality. No one likes reading detailed documents, but they are important because they can help shape and guide interactions and relationships between entities, including between an architect and a client. They are also mandatory under the regulatory framework, as are certain minimum contents in the regulatory framework.
Be contained in the agreement now during the focus groups, participants were we used questions to the participants to understand whether the obligation to have a client architect agreement in place is well understood and to assess how effective those agreements are used in practise, particularly to deliver successful client architect relationships.
Now.
A key finding is that there is evidence in the evidence indicating that client.
Take agreements are not being used effectively or constructively, both in the context of smaller projects as well as in the context of larger projects, albeit for potentially different reasons. Bespoke contracts are common in both contexts in relation to smaller projects. The point was made by some participants that standard contracts are not used because they're perceived to be too lengthy.
The point was also made that details may not details, incline, architecture, architect agreements may not be explained.
And the point was also made that the agreements are not referred to during the course of a project, which may mean that the client doesn't have a clear recollection of roles and responsibilities as the project progresses in the context of larger projects. As I mentioned before, bespoke contracts are typically used, standard form contracts, including a S4122, the general conditions of contract for consultants does not adequately deal with Novation and if one.
It is not adequately dealt with in the in the standard. The point was made that this may open up all the other aspects to negotiation, leading to this very bespoke agreement ultimately.
The point was also made that in the context of larger projects, clients typically put forward the contract rather than the other way round, and these bespoke contracts may focus on risk allocation, management and liability rather than the detailed parameters of the architect's design obligations. The point was also made that roles and responsibilities may evolve during the course of a project, but the agreement details may not keep pace with those changes.
An insight from the focus groups is there appears to be a lack of appreciation of the value of using a standardised client architect agreement, particularly one that is compliant with the regulatory framework and an important implication is that architects need to adopt A proactive approach in all procurement processes, including in the context of larger projects, to ensure that the client architect agreement complies with the regulatory framework. Failure to do so leads.
Can lead to a breach of regulatory obligations. I'm going to pass now back to.
Bell to share her practical insights on this topic.
Isabel Legge 39:22
Yeah. So this the question here was how client architect agreements are used in practise and what can go wrong. So I think again we can talk about unclear roles and responsibilities, but we've already talked about that. So I'll just move on to the next section which is inadequate understanding of the terms and conditions in the client architect agreement. So in simply do you understand the agreement and do your staff understand the agreement?
It's important that your staff understand the agreement because they may actually be undertaking the work and.
There's such they should be Privy to the terms and conditions in that contract.
Do your clients understand the agreement? Have you taken the opportunity to explain the terms and conditions of the agreement to your clients? It can be beneficial to go through the agreements terms one by one with your clients to ensure that they understand all elements of the agreement and have an opportunity to ask any questions. It's probably more relevant to small scale projects where you're producing their fine architect agreement for the.
For your clients.
So then we have bespoke contracts that do not define all the requirements under the architect's project professional conduct.
There are lots of architects operating with fee agreements or other agreements that do not actually comply with the specific requirements in the architects code of Professional Conduct.
They often admit certain requirements and or they're not signed by both parties and therefore they may may be a breach of your professional obligations. So you should always check any agreements against code before entering into them.
Bespoke contracts that do not clearly define terms and conditions similarly to architects, often draught their own contracts that do not clearly define the roles, responsibilities and services to be provided at each stage of the process.
This can be risky as they may be inadequate information in the contract to protect architects from performing works outside their roles and responsibilities and from doing work without fee. If you are going to provide your own bespoke client architect agreement, ensure you seek legal advice and confirm that you have complied with all relevant laws.
Sort of bespoke contracts that a client, a client centric, can pose risks for architects.
Mainly in larger projects, in particular D&C projects.
The agreement should establish a framework for the project and they should be used as an opportunity to outline the work, key stages and the way the way work will be undertaken.
And potential risks and issues at each stage, many contracts for large projects tend to focus on risk allocation and management, and the less about the detailed parameters for the architects design obligations, architects may need to run these type of client architect agreements past their insurers to understand the exposure to liability.
On a case by case basis and negotiate with the client, negotiate negotiation with the client may be necessary.
So this brings us to the next question which is question #3.
What are the main benefits of a standardised client architect agreement for an architect from a compliance perspective?
'Cause, we're running out of time. I will quickly answer this question. So this this is 3 the answer to this question is the agreement contains the mandatory requirements for.
Requirements required under the regulatory framework. So obviously it's still really it's still good practise to get your lawyer to review any of the any draught agreement you have and also it's very good to read your own agreement, especially if you haven't, I haven't actually.
I haven't actually written the agreement yourself, so that that is the main thing that we kinda get from a standardised document. All right, thanks, Ariel. We can hand back to you for a summary.
Dariel De Sousa 43:50
Thanks, Isabel. So it's some of the key recommendations in the deep dive report were largely through industry bodies to potentially undertake a survey to under better understand the main drivers for these apparent preference for bespoke contracts both in the context of small scale projects and larger scale projects.
Engagement with industry and relevant stakeholders to encourage greater use of standard form contracts to work with relevant bodies to establish standardised agreement in different procurement contexts.
And to engage with government bodies to establish a government standard contract that meets the regulatory requirements under the Code of Professional Conduct and also recommendations for education and training bodies to help architects explain and interpret client architect agreements in practise addressing some of those issues that Isabel has just pointed out. So let's move along to the next topic which we have already sort of touched on in in previous.
Parts of the discussion relating to fee structures so transparent fee structures can help ensure successful client architecture relationships by clarifying the fees payable for particular services. The deliverables that be can be expected for particular fees and any additional services that may incur additional costs. Now, as Isabelle has already pointed out, aspects of fee arrangements are also regulated under the regulatory framework.
Client architect agreements must set out how professional fees and costs will be calculated. They must include reasonable estimates of disbursements. The architect must inform the client of how a change or amendment in services will impact professionals fees and costs and fees and costs must not exceed the fee structure set out in the client architect agreement. Now, during the focus group discussions, various various fee structures were discussed.
To understand how they might have an impact on client architect Relationships, 2 main fee structures were referred to percentage based fees, fees that are based on a percentage of construction cost and fixed fees. In general terms. Based on the feedback from participants, quite fixed fees are likely to be preferred by clients for obvious reasons and percentage based fees are likely to be favoured by architects in relation to percentage fees. The point was made that.
Fees are relatively simple and easy to use for smaller scale projects, and it can be useful to ensure that inflation is accounted for and provided for in architectural fees, but it's harder to make this type of fee structure work in larger scale projects for which a budget a fixed budget may apply. Nonetheless, percentage based fees may be used to estimate the final project cost, including in for larger scale projects.
The point was made that clients want to understand how fees relate to the actual services that were provided, and this may not be self-evident or obvious when percentage based fees are used and it was also noted that percentage fees can lead to arguments and dispute and ultimately destabilise the client architect relationship in relation to fixed fees. Clearly clients are looking for fee certainty and this is what fixed fees provide.
But fixed fees rely on full scoping of services upfront, and this places significant burden on architects to scope the services, identify inclusions and exclusions. It also may be difficult to scope services, for example, the work involved by an architect to obtain development approval, and it was also pointed out that architectural fee scales, which can be useful to standardise and structure fee.
Fees for particular services have been in the past ruled anti competitive and therefore this sort of begs the question, what is this happy middle ground between these two sort of options? I'm going to now pass back to Isabel to talk about her practical perspective on this issue.
Isabel Legge 48:21
Yeah, I think diary Break brings up some good points there. So this is sort of looking at how fee structures can impact client architect relationships. So clients are often unclear about what the fee, how the free structure works, which is what Darrell was commenting on and you know we have the three types of fees, fixed fees, percentage fees and then alley right fees. I think it's important to be transparent about that fee structure from the outset.
As noted previously, walking through the client architect Agreement is not only an opportunity to discuss the terms and conditions, it can also be an opportunity to clearly define the fee structure.
And ensure your clients understand what's included in your fee and what's excluded from your fee, or is what's considered additional work.
When it comes to percentage fees, I think most clients it's, it is generally used for small scale projects. Most clients are sort of they allow for the sorry they allow for scope changes, variation and escalation which is kind of good for architects.
However, clients are often unclear about how they work.
And do not factor the kind of increases in architectural fees into their overall project costs.
And so when the work cost of works goes up, they don't also factor in the fact that the architects fees will go up. It can be useful to provide clients with an adjusted fee structure every time you provide them with an updated budget for the cost of works, including any reconciliation of previous stages. So to Dario's point, transparency of the fees is good.
You will profit by not take relationship, so excuse me inadequate fee structure for services being delivered. So I think are you fees appropriate to the project, it's if your fees have not been fully considered you may find yourself in a position where your fees are no longer adequate to fulfil your contractual obligations. This can put a huge strain on your practise and may lead to a reduction in the quality of the work that you're outputting. So be careful not to undervalue your time and I think this is.
Especially relevant at the moment when you know the current time is not that great.
Fee charges are inconsistent with the client agreement. I think this is relatively straightforward, so make sure that what you're charging your clients is what you've said you will charge your clients for each of the stages.
Turn. Yeah. Unclear explanations of costs and escalation fees and variations. So I think it's really it's it's reasonable for your fees to go up each year, but make sure the client architect agreement clearly outlines how and when cost escalations will apply.
When it comes to approvals for variations or additional work, get this in writing before you proceed with the works.
If your clients have exceed so for example, if your clients have exceeded the design meetings, let them know and have them approve any future meetings in writing. This will remove any ambiguity about additional costs. Ensure that you are able to charge for the works.
Inability to demonstrate value to clients through the fee structure, so it's kind of an interesting one. But whatever your fee structure, percentage fees, fixed fees, alley rates, or a combination, it's imperative that your clients.
How are you? The services you will deliver for those fees and appreciate the time it will take. So this might mean that you need to take a little bit more time to let them know and clearly understand all the different tasks you need to undertake for each of the different stages of the work.
And if your clients want to negotiate your fees, in my opinion, in my opinion, don't.
Only negotiate the terms of the engagement. If the clients ask you to reduce your fees, then in turn reduce the scope of the service you will provide.
If a client believes they can simply ask you to do something for less, they may apply this logic to additional scope throughout the life of the project.
All right. So that will bring us to question #4.
Alright, which of the below is not a requirement of the Victorian Code of Professional Conduct in relation to client architect agreements?
So this one the answer is B timing of payments for fees and costs. You'll find that all of the other three or the other two elements, how professional fees and costs, including dispersants, will be paid and how professional fees and costs of the services will be calculated. Both of those are covered off in under the Code of Conduct.
Or clause 4.2 I think. So it clearly spells out what you need to have in your client architect agreement.
So that brings us to our last oh, don't dare us. Let's summarise this one, and then we'll go to our last topic.
Dariel De Sousa 53:38
So just in terms of some of the recommendations that came out of this topic, it was recommended to industry bodies to consider establishment of a standardised specification of architectural services. The full details that is suited to the Australian construction context and equivalent already exists in the UK and and interrogating mechanisms to demonstrate value to Isabelle's point to clients through different fee structures. A recommendation was also made to education and training and training bodies.
To explain to those that are being educated and trained, the pros and pros and cons of different fee structures.
And the use of existing tools to better quantify and value architectural services and communicate that value to clients. So we move then to the last substantive topic relating to education and training during the focus groups, there were a broad range of issues that were identified by participants in relation to further education and training needs that could help to improve client architect relationships, education directed at architectural students.
And graduates at architects, but also to clients. So let me just share with you some of the key topics that were identified in relation to training for clients. The point was made that clients need to be better educated about the work that goes into delivering design services and what the agreed fee actually covers.
There was a reference to the need for more education about communication for students, graduates and architects, particularly in relation to it describing what their work covers and what they are not responsible for doing.
It reference was also made to the need for more education about listening skills so that architects are better able to listen to clients, particularly in complex multi party contexts and be responsive to what the clients needs are more education is needed in particularly for architectural students to help them better value their services and understanding how long particular services take to.
Prepare or deliver.
And more education is needed across the board for project delivery, and it's no coincidence that these topics.
That warrant further education and training sort of marry up with those some of those issues that we identified right at the outset that have the potential to undermine successful client architect relationships.
What is clear from the discussion as represented in this slide is that.
Things are looking for more guidance about what a good client architect relationship looks like, not just what not to do, but also what good looks like architects could benefit from more education about how to use their regulatory obligations. Those obligations that we've stepped through during this presentation to really forge positive and effective client architect relationships and guidance and case studies for architects and clients as well to highlight factors that can lead to positive client architecture.
Ships in different procurement contexts would be very useful, so I'm going to hand back to Isabel now.
Isabel Legge 57:13
I'm just gonna go quickly through this last slide, which is how education and training could improve client architecture relationships. So little clock talks about what architects could be better at and often at the AIB we get asked about why do we not advocate for architects and simple answer is it's not our role, but it is the role of all acts. It is the role, it is the responsibility of architects and also their professional bodies. Then we talks about communicate communicating what architects roles and which sort of Darrell's already.
Picked touched on which is, you know, articulating what the roles and responsibilities for each bays are.
For types of people within your practise are responsible for principles versus architects, and then also you know how complex projects and how the roles vary and how the architects may take on multiple roles. So these have all been sort of key areas where upscaling in communication has been identified and I think.
Architects seem we seem to be, seems to be focused more on what specifically is the client architect relationship. But there's also there's a lot of avenues. There's lots of educational.
Material available. There's lots of books, podcasts, website websites, Ted talks. They're all for focus on how to be a better communicator. They're not specifically targeted at architects, but they're all very relevant and also very accessible. So I think that that's somewhere that architects could start by getting a little bit more education on this topic and also the IO BS looking at putting together a webinar in the car in early in next sometime next year.
Where we're going to get a specialist in communication in to talk about.
Architects would be better at this.
And the other one, the one at the bottom, is about understanding the minimum design documentation standards. So this one the VBA has just pulled out. If you have, which should have been aware of, but they've put in out the.
A design documentation practise guide for Class 2 buildings now. At the moment they've only done one for Class 2 buildings, but a lot of the stuff is still relevant to other classes of buildings as well. And it's really good, sort of.
Good reference document if you're putting together a set of documentation to see what you need and the VBA is planning to publish similar documents for all the different building classes, so that's it for me. There's no more questions so I will hand back to dariel just for the last closing comments.
Dariel De Sousa 59:52
Thanks, Isabel. I think we'll just pass back to Giorgio. We're running a little bit behind schedule, but we were due to finish at 1:00, but maybe we can go a few minutes over just to address some of the questions in the chat. So over to you, Giorgio.
Giorgio Marfella 1:00:06
Thank you, Dariel. Thank you, Isabel. So this was a very thorough presentation that provided the background, the backdrop from the research, plus some useful tips on how to handle architectural services on a day-to-day basis.
Before I just make some reference to to questions or give you an opportunity to do so, I saw in the Q&A that the several attendees asking how to access the the questionnaire, if you press on the button on the top bar Q&A, you'll be able to to find a, find a link to a form.
You can feel the questions were quite intuitively accessible for for all for all of you, so I hope you can take this opportunity to to do a complete the questionnaire in this last two minutes and submit it to the rbv. The Rbv will then respond.
Acknowledging your your attendance to this CPD, which is a formal opportunity for CPD to be recorded.
I don't have specific question that arise, but perhaps I can mention one that in the past that a surface which is the idea that of providing templates through which.
To structure clients agreements.
And of and some jurisdictions in Australia provide templates to that extent, but the the in the past the rbv has been asked to whether it was worth considering that and.
And that I don't know if you want to maybe touch on that or what will be the the right response or or why why, why what other options and alternatives are available for architects to consider structured templates for client architects agreements.
Dariel De Sousa 1:01:56
I believe that there is a standard form contract that exists in that's been developed by the NSW ARB and I understand that standard form contracts have also been developed by a number of industry bodies, including the AIA and as Members you will have access to those standard form agreements at the end of the day, the mandatory sort of minimum requirements for client architect agreements are fairly straightforward and not that.
Flakes for reflecting in your.
Agreement with the client, whether it takes the form of an e-mail or a document or whatever. But if you are able to avail of a standard form agreement that has been pre prepared by another organisation, presumably gone through lawyers, et cetera, that is not a bad option. But having said that, the minimum mandatory requirements in the Code of Professional Conduct are fairly self-explanatory and things that you should be doing as a matter of course to really drive successful relationships.
Irrespective of the fact that it's an obligation to include these in the agreement.
Giorgio Marfella 1:03:06
Very good. Thank you, Dariel. So it's important to be aware. First of all of affected code of conduct is prescribes what what should go in the client architecture agreements and in addition to that professional membership bodies provide.
The standard templates that can be used that also reflect those provisions. Now this takes me right on the end at 1:00 PM. So thank you very much, Isabel and Ara for being so timely constrained as well. There was a lot of information that that we provided and I have just a pleasant task to release the audience.
Jobs in serving the clients, which of course I understand architects, do very well in Victoria and I also ask you to stay tuned to the arbv through our newsletters, we will be releasing more webinar opportunities, particularly stemming out of the research in the deep dive report that we prepared with NSW and the next topics we'll deal with matters of procurement, building regulations and disruptive change. So with this, I just wish you all.
Good afternoon and I'll look forward to see you again in the future.
Dariel De Sousa 1:04:15
Thanks everyone.
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