Small Project Design

This message has been cross posted to the following Discussion Forums: Small Project Practitioners and Custom Residential Architects Network .
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I was wondering if anyone has had experience with replacing a historic home destroyed by fire and the clients' homeowners' insurance company.  I have such a project where the  schematics were approved by my client and the Historic Preservation Commission in late August. The replacement house is a bit larger but configured differently from the original house. While my client signed a letter of agreement for schematic design, all invoices were paid by the insurance company.

My proposal for design development stopped forward progress since the insurance adjuster apparently  deemed my fee too high. He has yet to communicate directly with me.  Now, my client has some kind of an agent referred by her insurance agent who is attempting to negotiate a fee and architectural services with me. This agent, although not a licensed contractor, has told me that he will obtain permits and build the house and negotiate with the insurance company.

While it is an interesting project, I'm not sure who my client will be and who I will be providing with architectural services.
I'd very much appreciate any advice.

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Robert Reinhardt AIA
sole proprietor
Reinhardt Architects
Garrett Park MD
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May I suggest billing the client for work done andnot going further with this arrangement. 
No third party has the right to negotiate your fees and lower them unless you let them.
Mary Graham

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Historic projects can be very complex. If you are NOT familiar with doing historic preservation and rehabilitation work, you might unintentionally undermine the historic fabric and entitlements the property owners currently enjoys. This includes reduced property taxes, tax credits, accelerated depreciation and amortization, reduced setbacks, encroachments, floor area, and transferable development rights. Local jurisdictions usually have a historic preservation ordinance which describes these entitlements.

Since the historic property was damaged, I would recommend the Owners hire a historic preservation architect to research and evaluate (Historic Structure Report or Historic Structure Evaluation) the remaining historic structure. This will help identify the nature of the current residence, and whether there is anything remaining still historic. Further, if there are remaining historic elements, the report will document and evaluate the condition of those elements a.) original in good condition, b.) original in poor condition, c.) not original. If too much of the historic fabric has been undermined, then you would have a case for demolishing the residence and starting from scratch. If the property is in a qualified Historic District, it might have to be replaced in accordance with local historic ordinance, review, and standards.

However, if the building is reparable the HSR or HSE will provide guidance on creating a historic preservation or rehabilitation plan. Working with a historic preservation architect is important, and will help preserve the property owner's historic entitlements.

Step one is to talk to several historic preservation architects, briefly explaining the nature of the property and damage, and finding-out if they've worked on similar projects with other architects. Also, speak with the local historic board staff and find-out what the rules are, and the nature of the property's entitlements.

The insurance appraiser/adjust may be opening a can of worms for the property Owners.

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Lee I. Lippert, AIA
Principal
Lippert & Lippert Design
Palo Alto CA
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Original Message:
Sent: 10-14-2014 19:35
From: Mary Graham
Subject: Replacing a historic home destroyed by fire & insurance comapnies

May I suggest billing the client for work done andnot going further with this arrangement. 
No third party has the right to negotiate your fees and lower them unless you let them.
Mary Graham

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Your best bet would be to disengage after your accounts are settled, there are red flags all over your representation here.

Before that, you need to talk to an attorney for a couple of reasons: potential liability even if you are not the filing architect, 
and as your design has been accepted by an Historic Preservation Commission the value of your service, and documents, 
has changed, increased. Too many architects carry the notion that they are disposable or interchangeable - bad business
practice.

Donald Richardson AIA


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Donald Richardson AIA
CEO
Donald S. Richardson, Architect
Providence RI
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Original Message:
Sent: 10-14-2014 19:35
From: Mary Graham
Subject: Replacing a historic home destroyed by fire & insurance comapnies

May I suggest billing the client for work done andnot going further with this arrangement. 
No third party has the right to negotiate your fees and lower them unless you let them.
Mary Graham

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Some options are to separate your services into what is absolutely necessary for the insurance reconstruction and negotiate a fee with their agent.  Basic contracts can end up with additional services for change orders which can be on hourly rates. You can present the insurance with all the services you need to render and all the potential pitfalls they could face whether with you or another architect to justify your fees.

You can then work a fee with your client for the extras the client desires.

If all else fails, the suggestion of Mary Graham herewith is wise.

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Imad Abdullah AIA
Landmark Architects Inc.
Houston TX
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Original Message:
Sent: 10-14-2014 19:35
From: Mary Graham
Subject: Replacing a historic home destroyed by fire & insurance comapnies

May I suggest billing the client for work done andnot going further with this arrangement. 
No third party has the right to negotiate your fees and lower them unless you let them.
Mary Graham

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Insurance work, up front is difficult,  You are always working for your client, but prior to construction you are dealing with the insurance company as they are going to cut a claim check to the insured.

They have a template of costs that they feel is "market rate" for fire repair.

Historic preservation work costs much more. Plus you are providing a changed interior plan. 

Their standard for a claim is to pay for like kind and quality. If the policy is written accordingly they may pay for code required upgrades. 

The insurance companies want everything broken down to the smallest detail.  The more detailed your cost proposal the better.  You will need to break out your costs for replacement work separate from the improved interior work. You have to be able to justify your cost of service.  The fact that the Historic Preservation office is involved make the whole design aspect more difficult.  You have to be able to justify your fee because of the time the HPO requires. 

There may be work that the insurance company simply will not pay for and your client will have to pay.

If your client is looking to have the insurance company pick up the check for all the work, get paid to date and walk away.

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John Feick AIA
Feick Design Group, Inc.
Sandusky OH
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Original Message:
Sent: 10-14-2014 19:35
From: Mary Graham
Subject: Replacing a historic home destroyed by fire & insurance comapnies

May I suggest billing the client for work done andnot going further with this arrangement. 
No third party has the right to negotiate your fees and lower them unless you let them.
Mary Graham

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Hi Robert,
I have extensive experience in dealing with this type of issue.

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Stephen Olson AIA
Principal
Olson Architects
Santa Monica CA
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Original Message:
Sent: 10-14-2014 19:35
From: Mary Graham
Subject: Replacing a historic home destroyed by fire & insurance comapnies

May I suggest billing the client for work done andnot going further with this arrangement. 
No third party has the right to negotiate your fees and lower them unless you let them.
Mary Graham

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My first question would be how the contract was handled and who was named as the client in that contract? I'm not sure how the insurance company could try to negotiate once you're into the project if you already have a contract - unless there were circumstances that led to additional work that they deemed excessive.

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Thomas Bank AIA
Principal Architect
Simply Stated Architecture, P.C.
Lemoyne PA
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While not identical, we have a similar situation.  A homeowner's new home did not pass their HOA's requirements once built.  (We didn't design the home.)  After some legal wrangling with the builder/developer, the title company stepped forward to pay for changes.  We were hired to design the changes.  We are technically under contract with the title company; their attorney acts as the title company's and homeowner's representative.  We contracted for full services, and bill for our time at hourly rates.  We didn't know how difficult the HOA and others would be, so couldn't give a hard fee.  We did provide a "not to exceed" number, which due to delays, revisions and scope creep has been exceeded, but we keep the atty. informed and there hasn't been problems with that yet.  The homeowner occasionally contacts us directly, which seems to be okay with the atty.  This is a less than ideal situation, we'd usually contract directly with the homeowner.  

Our "legal" responsibility it to the title company, from your description it sounds like your contract is directly with the homeowner.  Are they happy with your fees?  Who "owns" the design in your contract?  If you do, you might want to check on the legality of them hiring a different architect to develop your design.  Keep in mind that the Commission has approved your design, you have some power here.

Since our work needed to be approved by the HOA, as well as the homeowners and title company, it was difficult to set a hard fee. You're working with a Historic Preservation Commission so it would be similarly difficult; hourly rates are best.  Can you show that your rates and fees are commensurate with your area, expertise, and type of work?

I'm not sure who this "agent" is.  Who does he contract with?  Is he the owner's rep?  Is he an atty.?  What is his background and experience?  Will his fee offset any savings they can get by getting you to reduce your fee?  Who do you contract with?  If you contract with him, that's who you're responsible to, not the homeowner.  The answers to any of these questions shouldn't necessarily cause you to walk away, you just need to be comfortable with them.

I'm not an attorney, you should certainly discuss this with your own.

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Tomas Hart AIA
Principal
Hart STUDIO llc
Denver CO
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Your first step should be to determine exactly what are the roles and responsibilities of the newly hired agent.  It is not uncommon or inappropriate for you to request that your client provide you with a copy of the contract that the client signed with this agent.  Tell the client they can make a copy and black out any compensation information they do not want to share with you.  Note:  Your client should provide this to you, not the agent.  Also, you may need to explain that if you are to consider adjusting your fee, the only justification for doing so is if you are providing less services.  If they will not share this contract with you, tell them that you need to change your compensation structure to hourly rates (with no stated limit).  The reality is that if they won't provide a copy, you have the information you need to know that you should walk away.  Read and understand what the agent claims he or she will be doing.   Once you fully understand the situation, negotiate or stand firm as you see fit. 

My own commentary:  It has been our firm's experience that such agents and project management companies do not usually provide all that they claim.  Instead they take advantage of the architect, trying to get us to do their work for them.  Especially since many of the supposed review responsibilities that they claim to do are the same as an architect's responsibilities.  Be prepared and know how you will handle this in advance!  My own experience has been that once a third party of this sort is added to any project, it is more work, more delays, and more paperwork for me (the architect) and also for everybody else involved.   It is my understanding that they sell themselves as being the "objective, honest" owner's rep, protecting the owner from all of us disreputable architects and thieving contractors.  Again, know and understand the agent's role, how the owner views the agent, and what the agent is really going to be doing versus the glossy claims that are made.

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Robert Smith AIA
Architect, AIA, LEED AP
Talley & Smith Architecture, Inc.
Shelby NC
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