CCA Fee Considerations

by Tyler Schaffer, AIA

The CCA phase can be labor intensive, especially on large, complex projects. To successfully deliver a project, a significant amount of time and effort may be necessary by the architect to administer the contract for construction. For lump sum contracts, unforeseen issues that arise during the CCA phase can affect the overall profitability of a project.  Unfortunately, it may be difficult to secure additional fees from the client being that the CCA phase is at the end of the project and the client’s budget is diminished. To avoid impacts to project profitability, an accurate fee proposal needs to be estimated. This white paper identifies common causes that affect project profitability during CCA, how they can be prevented or mitigated, and an effort-based means to establish accurate fee proposals for lump sum contracts.

Fee Impacts

There are numerous causes that can drain the CCA phase fee for lump sum contracts. Some causes can be prevented through thoughtful planning. However, there are other causes that are outside of the architect’s control and can only be mitigated. To ensure a project's profitability, CCA fees need to be large enough to account for these conditions. The following is a list of various impacts to CCA fees and how they can be mitigated after they occur or prevented altogether:

Fees not aligned to scope of work during contract negotiations

1. Cause: Underestimated fees for the CCA phase due to unclear or misunderstood scope.  Onerous contractual terms or client processes required more hours than anticipated.
   1. Prevention: Ensure the contract clearly articulates the specific scope of the CCA phase and that exclusions are indicated. Meet with the client during contract negotiations to discuss the specific scope and establish clear expectations.
   2. Mitigation: Meet with the client to discuss the issue. Negotiate additional hours or reduction scope due to vague contract language.
2. Cause: Optimistic work plan did not budget enough hours. For example, more site visits, travel time, or back punches is necessary than originally anticipated.
   1. Prevention: Establish a conservative work plan that will allow for unforeseen budget impacts.  Utilize an effort-based method to accurately establish a budget.
   2. Mitigation: Explore ways to work more efficiently. Assign junior level staff along with more experienced staff to divide CCA tasks to preserve fees.
3. Cause: The client is unwilling to compensate for adequate hours. The client may not be convinced of the value architects provide during the CCA phase.
   1. Prevention: Educate the client to understand the value of a properly administered construction contract.  Utilize an effort-based method for establishing a budget to justify the fee proposal.
   2. Mitigation: Negotiate a reduction in scope to align to reduced fee.
4. Cause: Remaining fee is insufficient.  The bulk of fees were spent during the design phase and there isn’t enough fee remaining for the CCA phase.
   1. Prevention: Establish adequate fees for the design phase and diligently follow a work plan that keeps the project on budget.  If the burn rate of the fee begins to exceed the work plan, make the client aware well before the remaining fee is spent.
   2. Mitigation: Meet with the client to discuss the situation. Explain the reasons for the design phase effort to negotiate additional fees for the CCA phase. Alternatively, negotiate the reduction of CCA phase services to align with the remaining fee.
5. Cause: Scope split with local architect not aligned with fee and actual level of effort.
   1. Prevention: Ensure the contract clearly delineates the specific scope of the CCA phase between parties.
   2. Mitigation: Discuss the scope with local architects and develop efficiencies which may include trading scope.

Scope creep

1. Cause: Owner requested design changes require additional time and effort of the architect.
   1. Prevention: Make sure the client is aware of the cost and fee impact of late changes.
   2. Mitigation: Negotiate change orders as additional services for requests that are out of scope. Include fees for any additional service proposals to resolve permit reviewer comments, review and approval of associated change order proposals, page-turns with the contractor, etc.
2. Cause: Client demands architect manage more of the CCA process after the contract has been negotiated.
   1. Prevention: During contract negotiation, discuss the CCA effort with the client to set clear expectations then document inclusions and exclusions in the proposal.  Likewise, consider including optional additional services to cover exclusions.
   2. Mitigation: Meet with the client to discuss the inclusions and exclusions indicated in the contract as a means of negotiating additional services. 

Onerous GC requests

1. Cause: GC requests architect to coordinate work of subcontractors
   1. Prevention: Ensure AE contract and the Contract for Construction includes language clarifying the architect’s role during CCA .
   2. Mitigation: Discuss with the GC that subcontractor coordination is the scope of the GC, not the architect.
2. Cause: GC requests architect more time on-site or in the site office to work collaboratively (especially on Design-Build projects)
   1. Prevention: Ensure AE contract and the Contract for Construction includes language clarifying the architect’s role during CCA .
   2. Mitigation: For Design-Build projects, ask the GC for more fee to compensate for the on-site presence.
3. Cause: Excessive substitution requests. Each requires time for the architect to review and evaluate.
   1. Prevention: Establish a concise substitution procedure in Division 1 of the specifications.  This can make the substitution request quicker to review. Include language in specifications that the Owner will be compensated by the GC for the AE’s time in reviewing substitution requests.
   2. Mitigation:  Offer page-turn reviews with the GC, expediting the review of the substitution requests. Reviews should coincide with site visits to maximize efficiency.

Incomplete submittals

1. Cause: Missing or uncoordinated shop drawings
   1. Prevention: Set expectations with the GC during the preconstruction meetings.  
   2. Mitigation: Reject submittals immediately if they are clearly incomplete.  If there are too many resubmittals required for proper review, then there may be grounds for additional services from the owner per B101 4.2.3. Ensure that this issue is flagged during an OAC meeting and documented in the associated meeting minutes.  Similarly, request a page-turn after a set number of resubmittals to expedite the process.
2. Cause: Unreviewed or unanswered questions from subcontractors to GC are directed to the architect.
   1. Prevention: Set expectations with the GC during the preconstruction meetings.  
   2. Mitigation: Reject submittals immediately if they are clearly incomplete.  Discuss with the GC to ensure they are reviewing the submittals thoroughly. If this continues, discuss the issue with the client.

Inefficiency of GC

1. Cause: Inexperienced GC project engineers. Architects may need to spend time assisting project engineers to maintain the pace of construction.
   1. Prevention: Ensure AE contract and the Contract for Construction includes language clarifying the architect’s role during CCA.
   2. Mitigation: Notify senior GC staff and ask them to train specific staff. If novice project engineers continue to ask questions/ require training, direct them to their senior coworkers for explanation. Provide regular feedback to senior GC staff on how their staff are performing.
2. Cause: Turnover of GC’s staff. The loss of project knowledge on the contractor’s side could cause the architect to revisit already resolved issues.
   1. Prevention: None
   2. Mitigation: Maintain clear records of communications.  This can provide an efficient means of relaying the previous decisions to the new GC staff.
3. Cause: Poor organization of GC’s records.  There are inefficiencies in accessing information if the GC isn’t maintaining clear records of documents.
   
   1. Prevention: Require the GC to utilize Project Management Software for maintaining records of communication in 013100 of the specification.
   2. Mitigation: Double log communications from the GC on the Architect’s Project Management Software
4. Cause: Excessive/unwarranted RFI’s, unnecessary submittals not required, or incorrectly administered RFI’s that should be either submittals or substitution requests.  Inefficient use of architect’s time spent on questions related to scope already clearly covered in the contract documents.
   1. Prevention: Ensure the RFI and submittal processes, and what defines an appropriate or inappropriate RFI or submittal, are properly defined in Division 1.
   2. Mitigation: Raise the issue during an OAC meeting and ensure it is documented in the meeting minutes.  If the problem persists, discuss with the client about the inefficiencies with this situation and ask for an additional fee to compensate for the additional effort.
5. Cause: Incomplete work at Substantial competition. This can cause inefficiencies in punch list review.
   1. Prevention: Set expectations with the GC during the preconstruction meeting. Make sure the contractor is doing complete pre-punches of all work.
   2. Mitigation:  Discuss with the client about the inefficiencies with this situation and ask for an additional fee to compensate for the additional effort per B101 4.2.3.  If there is a per visit cost defined in the AE contract, and the project is clearly not ready for punch list review upon arrival, then inform the Owner and Contractor and leave. Inform the Owner that that visit counts as one of the visits defined in the Contract and that an additional visit is required when the Contractor calls for punch list review again. This makes it easy to seek additional compensation when a per visit cost is defined up front.
6. Cause: Incomplete mockups.
   1. Prevention: Develop clear mock-up requirements in technical specification and discuss expectations in preconstruction conference.
   2. Mitigation: Similar to above if there is a per visit cost defined in the AE contract.

Schedule delays/ extensions

1. Cause: Construction schedule delay/ extension or bid phase extended due to issues in bid/ award process.  This can impact wage escalation and extend the architect’s time on the project. If the architect is providing regular support and meeting attendance, then this should include a commensurate fee.  
   1. Prevention: During contract negotiation, mandate compensation for wage escalation due to schedule extensions
   2. Mitigation: Discuss with the client the impact to the architect’s budget due to construction extensions and ask for additional fee

AHJ inspection issues

1. Cause: Inspector may be overly demanding and interpret the code differently than anticipated.
   1. Prevention: During the design phase, seek concurrence with the AHJ for code interpretations.
   2. Mitigation: Offer to perform page-turn reviews of the documents with the officials to help address any questions or concerns they have. Similarly, walk with the AHJ during reviews so that you can help address any concerns based on their observations. 

Inadequate contract documents

1. Cause: Specifications or drawings unclear or incorrect
   1. Prevention: Perform a rigorous QA/QC process during the design phase of the project.
   2. Mitigation: Completing/ correcting deficient documents during the CCA phase.
2. Cause: Missed coordination by the design team causes additional effort to resolve during CCA.
   1. Prevention: Perform BIM clash detection and interdisciplinary review of documents during the design phase of the project.
   2. Mitigation: Completing/ correcting deficient documents during the CCA phase.

Inefficient consultants

1. Cause: Consultants who are not timely or thorough
   1. Prevention: Discuss scope and expectations with consultants during contract negotiations.
   2. Mitigation: Discuss the importance of timely communication with the consultants.  If the issue persists, ask for different personnel.  Hold weekly or bi-weekly CCA design meetings to help manage expectations relative to RFI’s, submittals, and Construction Change Directives (CCD’s). 

Inefficiencies due to novice architectural staff assigned to the project

1. Causes: Several causes include: Not clearly articulating expectations of scope and quality during the preconstruction conference; Allowing excessive RFI’s, inadequate submittals, and improper substitutions; Not understanding when additional services for out-of-scope work should be negotiated; Or not being organized with accurate logs and communication documentation.
   1. Prevention: Train novice architectural staff so they are adequately prepared for CCA tasks.
   2. Mitigation: Assign a more senior architect to mentor junior staff on the project.

As noted above, there are specific strategies to help mitigate or prevent some of these issues.  However, having a discussion with the client and contractor early on to manage expectations can help avoid some of these issues altogether.  Upfront communication and continued collaboration are the keys to success.

Estimating a CCA Fee

To avoid fee impacts for these issues, it is best to establish an accurate CCA phase fee in the first place.  There are different contractual arrangements for the CCA phase such as hourly fees and fixed fees relative to construction cost.

• Hourly fees - billing on a time and materials basis during the CCA phase reduces the risk of the architect for unforeseen issues.
• Fixed Fees - these fees are capped.  This may benefit the architect if they are under budget at the end of the project, but it comes at risk if they are not.

To minimize the risk to the architect during the CCA phase for a project that has a fixed fee, a careful analysis should be performed to accurately determine the fee for the CCA phase.  Some architects choose to budget a percentage of their overall fee towards the CCA phase.  However, that does not account for the nuances of construction.  A more accurate method would be to establish an effort-based fee.  

To establish an effort-based fee, one would need to review their firm's historical data for Key Performance Indicators (KPIs) per project.  These could include the quantity and expended time for the following:

1. RFI's and submittals and review and processing time
2. Site visits (including travel time)
3. Meetings
4. Change documents
5. Change Order Reviews
6. Application for Payment review and processing
7. Punch lists reviews
8. Record drawings

If the KPI data is not tracked, then a more general estimate would be needed based on the hours spent on similar projects and delivery methods.  If the KPI data is tracked, then it can be averaged to form a basis of estimating CCA fee proposals.  However, there are other project specific considerations that should be factored in when establishing a fee.  These include the following:

1. Size of the project
2. Complexity of the project
3. Project delivery method
4. Experience of staff
5. Duration of construction
6. Client’s expectations for level of service during CCA

With this information in hand, the budget can be tailored for more accuracy.  It is advised to perform an analysis on a few completed projects and compare the estimated hours using this method against actual hours to test the accuracy of the assumptions.  It is also recommended to include a fee contingency during CCA to cover unanticipated efforts.  

I hope this information is useful to you in making this critical phase a successful and profitable one.

Disclaimer: The viewpoints expressed in this article are solely those of the author(s) and have not been approved by, reflective of or edited by other individuals, groups, or institutions. This article is an expression by the author(s) to generate discussion and interest in a particular topic. Though the article may cover specific legal and professional practice concepts, it should not be construed as professional advice. Always seek the advice of a professional licensed in your state for questions pertaining to the interpretation of laws and regulations.

About the author

Tyler Schaffer, AIA has been actively involved in the architecture industry for 17 years.  He has extensive experience in various stages of project development, including design, documentation, and construction contract administration across a wide range of projects, including commercial, residential, transportation, and institutional buildings. This diverse exposure has provided him with a comprehensive understanding of the challenges and opportunities that arise during the construction phase.

Tyler firmly believes that the role of construction contract administration is critical in bridging the gap between design intent and built reality. He is highly skilled in contract administration, construction documentation review, and on-site observation, ensuring that projects are executed in accordance with the highest standards and compliance with relevant regulations.

Tyler actively participates in industry organizations and has contributed to the advancement of the architecture profession. He is a member of the Seattle chapter of the AIA and is the chair of the Seattle Urban Design Forum.  He participates in various advocacy efforts such as the Comprehensive Plan Work Group, Transit Oriented Development Workgroup, and attends the annual Capital Connections event at the Washington State capital.  In addition, he is chair of the monthly Transportation Architect Roundtable, sharing his knowledge and experience with other architects and planners. He attends a quarterly design summit with his region’s transportation agency to share insights of his experience of construction related issues at their facilities.  He leads his office’s Construction Administration Forum where he presents topics related to construction administration best practices, emphasizing the importance of knowledge sharing.

Tyler is dedicated to promoting excellence in construction contract administration practices and advocating for the continued professional development of architects.  He is eager to contribute his expertise, insights, and ideas to enhance the Leadership Group’s initiatives and help shape the future of construction contract administration within the AIA community.

The CCA knowledge community regularly publishes white papers on topics related to construction contract administration. If you'd like to receive white papers and other related content, please sign up for CCA.