Small Project Design

I have been asked to include permit fees as part of a proposal I am preparing.  I'm looking for any advice or tips from anyone who may have been in this situation, as I have never done this and would like to make sure I have the proper language to avoid any calamitous situations.

Hi Gregory,
I'd ask the client more specifically if they want the cost to OBTAIN the permit included or the cost of the permit ITSELF included.  Also,

In Georgia, the permit is put in the name of the construction entity, not the Architect, not the Owner (unless they are acting as their own GC and the project is less than a particular dollar cost).

In your jurisdiction, can you accurately calculate the cost of of the Permit? (without difference of opinion with the AHJ regarding construction cost?).

Do you want to include it?  do you want to provide that service?  If so, I'd suggest adding some language to the effect that obtaining the permit and paying for the permit is included in the proposal, but the permit will be put into the name of the General Contractor.  One other potential benefit - you can hold Permit until all fees are paid in full.


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Lisa Stacholy AIA
LKS Architects, Inc.
Dunwoody GA
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I find the concept of the owner transferring a portion of their construction costs to the architect very suspect. I don't agree that the issue here is one of the architect being asked to include a non-determined cost in a fee proposal. I believe the issue is confusion on the part of the owner regarding what costs the owner is responsible for. It is the owner's construction project, an improvement of their real estate, located in their municipality. The architect provides certain defined design and administrative services, for which the architect is paid a fee for service. That fee should not be expected to cover building permits, zoning fees, utility hookup fees, municipal development assessments, or any of the myriad charges that municipalities pass on to the owner in exchange for allowing the construction of the project while supporting municipal services. The architect is well advised to make themselves knowledgeable regarding these fees in order to better serve the owner through advising them on their overall project budget; they typically assist the owner in navigating their relationship with the municipality as part of their services. But to set a precedent of including one or more of these fees as part of the architect's cost responsibility means that the next unforeseen bill from the municipality will end up on the architect's desk along with a note from the owner's lawyer.

I think what is called for here is a careful introductory discussion with the owner regarding who does what and who is responsible for what in a construction project. The owner in this case is either ignorant or manipulative; neither condition should be allowed to persist, or the rest of the project will be a rough ride for everyone involved.

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Philip Kabza AIA
Partner and Dir Technical Services
SpecGuy
Charlotte NC
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Original Message:
Sent: 02-11-2011 08:32
From: Lisa Stacholy
Subject: Permit Fees as Reimbursable

Hi Gregory,
I'd ask the client more specifically if they want the cost to OBTAIN the permit included or the cost of the permit ITSELF included.  Also,

In Georgia, the permit is put in the name of the construction entity, not the Architect, not the Owner (unless they are acting as their own GC and the project is less than a particular dollar cost).

In your jurisdiction, can you accurately calculate the cost of of the Permit? (without difference of opinion with the AHJ regarding construction cost?).

Do you want to include it?  do you want to provide that service?  If so, I'd suggest adding some language to the effect that obtaining the permit and paying for the permit is included in the proposal, but the permit will be put into the name of the General Contractor.  One other potential benefit - you can hold Permit until all fees are paid in full.


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Lisa Stacholy AIA
LKS Architects, Inc.
Dunwoody GA
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R. Sandquist AIA
Vice President
Sandquist Construction Group Inc
Lincoln NE
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I can only imagine that every municipality in every state of the union has their own variations on building permit applications.  We're fortunately quite flexible here in Lincoln, Nebraska.  Either the owner, the builder or the architect can apply for the building permit.  When in our role as the builder and we apply for the permit, we simply add this cost to our general conditions, and OH&P are added accordingly - nothing else.  The City can tell us in advance exactly what the permit + impact fees will cost based upon the estimated building cost.

So in Lincoln, the biggest difference in who takes out the permit is probably with regard to schedule if the builder has not yet been selected.  If the owner or architect apply for the permit (usually takes 2-6 weeks here, depending on project complexities), bidding and contracor selection can be in process as the City moves forward on the permit review process.  So this can save that 3-6 weeks in the overall schedule and completion date.


Original Message:
Sent: 02-11-2011 08:32
From: Lisa Stacholy
Subject: Permit Fees as Reimbursable

Hi Gregory,
I'd ask the client more specifically if they want the cost to OBTAIN the permit included or the cost of the permit ITSELF included.  Also,

In Georgia, the permit is put in the name of the construction entity, not the Architect, not the Owner (unless they are acting as their own GC and the project is less than a particular dollar cost).

In your jurisdiction, can you accurately calculate the cost of of the Permit? (without difference of opinion with the AHJ regarding construction cost?).

Do you want to include it?  do you want to provide that service?  If so, I'd suggest adding some language to the effect that obtaining the permit and paying for the permit is included in the proposal, but the permit will be put into the name of the General Contractor.  One other potential benefit - you can hold Permit until all fees are paid in full.


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Lisa Stacholy AIA
LKS Architects, Inc.
Dunwoody GA
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Why do we insist on being our clients' bank?
It's bad enough that we have to wait to get paid for our work. I have a hard time writing a check to a building department when I haven't even been paid for my work yet.
We do a lot of small jobs. Sometimes the permit fees exceed our fees. I think we are on the wrong side of the permit counter.
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Kevin Sullivan AIA
Architect
Boulmetis Architects
Cincinnati OH
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Original Message:
Sent: 02-11-2011 08:32
From: Lisa Stacholy
Subject: Permit Fees as Reimbursable

Hi Gregory,
I'd ask the client more specifically if they want the cost to OBTAIN the permit included or the cost of the permit ITSELF included.  Also,

In Georgia, the permit is put in the name of the construction entity, not the Architect, not the Owner (unless they are acting as their own GC and the project is less than a particular dollar cost).

In your jurisdiction, can you accurately calculate the cost of of the Permit? (without difference of opinion with the AHJ regarding construction cost?).

Do you want to include it?  do you want to provide that service?  If so, I'd suggest adding some language to the effect that obtaining the permit and paying for the permit is included in the proposal, but the permit will be put into the name of the General Contractor.  One other potential benefit - you can hold Permit until all fees are paid in full.


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Lisa Stacholy AIA
LKS Architects, Inc.
Dunwoody GA
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Kevin,
I agree with you. 

In a firm where I was formerly employed, we often used a permit expediter and this was very handy.  The client would pay the person directly and he would come to our office to pick up the submittal set and documents and/or I would meet him at the planning dept to initiate the process.

I think it's critical for the firm to be on top of the permitting process to fully answer the dept official's questions and to make changes in a timely manner.  Otherwise, projects can cross into "overtime" unnecessarily, and the client may not understand what's taking so long.

I wonder how other firms have handled this matter; who covers the time required to make changes, if any, during the permit process if a code official flags something on the drawings?

Also, do firms usually get paid for their time in seeing drawings through the whole permitting process?  Depending on what dept official you're working with, things can take a lot of communication time and extra time for myriad reasons- not to mention travel time, waiting time, meeting time, etc.  I would hope firms are getting adequately reimbursed for these services, too.


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Tara Imani AIA
Principal
Tara Imani Designs, LLC
Houston TX
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Original Message:
Sent: 02-14-2011 16:46
From: Kevin Sullivan
Subject: Permit Fees as Reimbursable

Why do we insist on being our clients' bank?
It's bad enough that we have to wait to get paid for our work. I have a hard time writing a check to a building department when I haven't even been paid for my work yet.
We do a lot of small jobs. Sometimes the permit fees exceed our fees. I think we are on the wrong side of the permit counter.
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Kevin Sullivan AIA
Architect
Boulmetis Architects
Cincinnati OH
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Hi Greg,

Gregory:  Personally, I'd avoid incorporating a 'fixed permit fee' in your proposal - you just may not have an adequate cost at the initial stages.   Since you've NOT even created a design solution how would you know exactly what actual $value$ for this item to add to you proposed fees for services.  Jurisdictions in our area base the  'plan check & permit fees' base on the proposed construction 'valuation'.  Unless you're real good at 'guestimating' the final costs of this 'future' job, I'd avoid it.  As a 'reimbursable expense', if I was to submit to a building department for my client, I usually define this line item as a direct reimbursable cost - not matter what it costs at the time.  Another thing to consider - just let the client and their contractor be responsible to pull the application for permit and pay all fees.  This keeps you away from any potential liability.  It's just so much easier that way.  Honestly, don't know how a potential client could 'insist' on your incorporating this into your proposal.  It's generally a big unknown at the inset of a job anyway.  Hope this might help.

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William Van Housen AIA
Owner/Principal
Van Housen Architecture
San Mateo CA
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Thanks to everyone for the feedback.  

I often list in my fee proposals an estimate for municipal design review or plan check fees because it helps my client see something closer their complete output prior to construction.  I emphasize in the proposal that this is only an estimate and is subject to adjustment once the true fee is known.  In my practice area, the cities generally will not issue a building permit to the architect who is submitting the project because they want to see evidence of worker's compensation insurance coverage from the responsible builder.  And that's fine with me because I don't want any exposure to those conditions.  The building permit application is a two-step process (plan check followed by permit issuance), so I also provide a stab at a building permit fee to be paid by the owner or builder when the permit is ready for issue.  Clients appreciate this information because it helps them budget and softens the surprises in this whole process.  This procedure gives them a little more advance information and helps smooth the trip to City Hall to pick up and pay for the permit.       
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Robert George FAIA
Robert S. George, FAIA, Architect
San Bruno CA
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