Small Project Design

I don't understand why you would ever pay the permit fees up front for your client.  Where I work in California,  the permit fees on a typical house are between $20,000 and $30,000 . At the time of submission, the Building department requires proof that all school fees have been paid (between 2.00- 6.00 per square foot) before they will even accept the documents for review.  Generally there is a 10% deposit to get them started. So with plan check fees, capital facilities fees, fire department fees, water and sewer fees, and school fees this is a big chunk orf change.  I have been in pactice over thirty years.  Never ever pay these fees out of your pocket!
Let your client know up front before you even start their project what they can expect to pay in fees to the City and/or County.  Most people with small projects don't have any idea of these costs.  As Architects it is our responsiblilty to inform our clients of all the costs associated with a project at the outset.  Some clients realize that they can't afford these fees and don't proceed. You may lose a project, but you will gain immeasurable credibility for yourself and architects in general. Which translates into a long and successful career.
Make sure that your fees are paid through the construction documents phase before submitting to the Building Department.
When the permit fees need to be paid, get a check for the fees from your client, or better yet have them accompany you to the Building Department to understand the process we deal with. 

Thomas Torvend AIA
Thom Torvend & Associates, L.P.
Modesto CA
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Absolutely agree.
We will sometimes put up the application fees for small projects. They just run a couple hundred dollars. But only for well established repeat clients. We will also pay for an engineering change submittal - maybe $75-100. It's rare, but we will do it in a pinch, just to keep things moving. It's more a timing thing than anything else. We look at it as good will / customer service. You will need to decide for youselves if it is good business or not. On the surface, it sure isn't. No way we would or could front a 20K permit fee. 

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Kevin Sullivan AIA
Architect
Boulmetis Architects
Cincinnati OH
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I can understand an architect working on a residential design not wanting to pay a permit fee, but for many types of architectural practices it makes sense to pay the fees for their clients.  If you are in a service business  (That's what architecture is!)  you should set up your business practices so that you provide service to your clients that have a meaningful impact on the final results. And in some cases, this means paying the permit fees upfront.     We work for retail, restaurant and corporate clients. For many of them, getting a check cut to a building department can take two weeks.  This would cause a terrible delay in these tightly scheduled projects. Yes, we have to plan our cash flow to 'get ahead of the game', in order to be able to cover the costs, but the 'payback' is immeasurable.  A client that understands that you are a partner in their success will not only come back again and again, but will refer work to you.  I think of the small amount of interest lost on that money as marketing costs.   And in over 15 years of business, and literally hundreds of thousands of dollars paid out in permit costs every year, we have never once yet been burned.   (knock on wood......!)  This might be a chance for architects out there to take a look at their own policies and practices, and think about how they can improve / change them to benefit the relationship with the client.

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Suzan Lami AIA
Lami Grubb Architects, L.P.
Pittsburgh PA
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Original Message:
Sent: 02-17-2011 08:48
From: Kevin Sullivan
Subject: re: permit fees

Absolutely agree.
We will sometimes put up the application fees for small projects. They just run a couple hundred dollars. But only for well established repeat clients. We will also pay for an engineering change submittal - maybe $75-100. It's rare, but we will do it in a pinch, just to keep things moving. It's more a timing thing than anything else. We look at it as good will / customer service. You will need to decide for youselves if it is good business or not. On the surface, it sure isn't. No way we would or could front a 20K permit fee. 

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Kevin Sullivan AIA
Architect
Boulmetis Architects
Cincinnati OH
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David Wulff AIA
David H. Wulff, Architect, Inc.
Lakeland FL
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Perhaps we, as architects, should take a page from attorneys.  They collect their fees up front, deposit them in a separate account, then work the hours and transfer the money from the that depostit account.  That way they are never behind.  Fees, such as consultants, permits, etc. could be handled in the same way.  This certainly would be different than sometimes waiting 3-6 months to get paid.  This way, we are never behind in payments.





Original Message:
Sent: 02-18-2011 12:27
From: Suzan Lami
Subject: re: permit fees

I can understand an architect working on a residential design not wanting to pay a permit fee, but for many types of architectural practices it makes sense to pay the fees for their clients.  If you are in a service business  (That's what architecture is!)  you should set up your business practices so that you provide service to your clients that have a meaningful impact on the final results. And in some cases, this means paying the permit fees upfront.     We work for retail, restaurant and corporate clients. For many of them, getting a check cut to a building department can take two weeks.  This would cause a terrible delay in these tightly scheduled projects. Yes, we have to plan our cash flow to 'get ahead of the game', in order to be able to cover the costs, but the 'payback' is immeasurable.  A client that understands that you are a partner in their success will not only come back again and again, but will refer work to you.  I think of the small amount of interest lost on that money as marketing costs.   And in over 15 years of business, and literally hundreds of thousands of dollars paid out in permit costs every year, we have never once yet been burned.   (knock on wood......!)  This might be a chance for architects out there to take a look at their own policies and practices, and think about how they can improve / change them to benefit the relationship with the client.

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Suzan Lami AIA
Lami Grubb Architects, L.P.
Pittsburgh PA
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I could not disagree more.

I have been "listening" to the disdussion reargding permit fees and those who feel it is our duty to our clients to pay building permit fees for them. We work exclusively in the private market and most of our work is in hospitality, principly hotels.

It is my experience that, regardless of what the contract says, our clients consider all of our out-of-pocket (normally reimbursable) expenses to be our cost of do9ng business and that they are negotiable after the fact . We find that, in most cases, they feel no obligation to reimburse us for monies spent for printing, permits fees, ADA Project Registration and Review Fees, shipping, etc. These costs typically run several thousand dollars on each project. We are lucky to recover a percentage of these monies.

Since this is the case, we must increase our fees to cover these costs, which makes us less competitive, and/or less profitable.

This is a tough situation. We cannot fund their projects; therefore, we DO NOT pay any fees for clients.

Clients are willing to pay permit fees to the City, since they are linked to the Building Permit. I think paying fees for clients is a dangerous line to cross and an irreversable precedent for the profession to estabish.

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Richard Labunski AIA
Labunski Associates Architects
Harlingen TX
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Original Message:
Sent: 02-18-2011 12:27
From: Suzan Lami
Subject: re: permit fees

I can understand an architect working on a residential design not wanting to pay a permit fee, but for many types of architectural practices it makes sense to pay the fees for their clients.  If you are in a service business  (That's what architecture is!)  you should set up your business practices so that you provide service to your clients that have a meaningful impact on the final results. And in some cases, this means paying the permit fees upfront.     We work for retail, restaurant and corporate clients. For many of them, getting a check cut to a building department can take two weeks.  This would cause a terrible delay in these tightly scheduled projects. Yes, we have to plan our cash flow to 'get ahead of the game', in order to be able to cover the costs, but the 'payback' is immeasurable.  A client that understands that you are a partner in their success will not only come back again and again, but will refer work to you.  I think of the small amount of interest lost on that money as marketing costs.   And in over 15 years of business, and literally hundreds of thousands of dollars paid out in permit costs every year, we have never once yet been burned.   (knock on wood......!)  This might be a chance for architects out there to take a look at their own policies and practices, and think about how they can improve / change them to benefit the relationship with the client.

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Suzan Lami AIA
Lami Grubb Architects, L.P.
Pittsburgh PA
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We used to pay the permit fees for our clients and then invoice them as a reimbursable expense. However, in the last few years with fees skyrocketing and a few clients that stretched us out 60 to 90 days for plan check reimbursable expenses, we can no longer afford to finance the project. I explain to the client up front that we do not submit drawings on their behalf to the building department; we will meet them or their representative at the building department to submit for permit and that they will need to pay for the plan check at that time. Our clients understand and it helps them further appreciate the process when they get to experience the trip to the building department.
 
The clients who get mad or want us to front the plan check fees are the types of clients we don't want. Not even in this time when clients are few and far between.

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Jeffery Frame AIA
Frame Architecture
Reno NV
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Original Message:
Sent: 02-21-2011 11:03
From: Richard Labunski
Subject: re: permit fees


I could not disagree more.

I have been "listening" to the disdussion reargding permit fees and those who feel it is our duty to our clients to pay building permit fees for them. We work exclusively in the private market and most of our work is in hospitality, principly hotels.

It is my experience that, regardless of what the contract says, our clients consider all of our out-of-pocket (normally reimbursable) expenses to be our cost of do9ng business and that they are negotiable after the fact . We find that, in most cases, they feel no obligation to reimburse us for monies spent for printing, permits fees, ADA Project Registration and Review Fees, shipping, etc. These costs typically run several thousand dollars on each project. We are lucky to recover a percentage of these monies.

Since this is the case, we must increase our fees to cover these costs, which makes us less competitive, and/or less profitable.

This is a tough situation. We cannot fund their projects; therefore, we DO NOT pay any fees for clients.

Clients are willing to pay permit fees to the City, since they are linked to the Building Permit. I think paying fees for clients is a dangerous line to cross and an irreversable precedent for the profession to estabish.

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Richard Labunski AIA
Labunski Associates Architects
Harlingen TX
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Theodore Streibert AIA, BSA
Streibert Associates Architects
Chatham MA
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My work is residential, and I usually insist that the contractor pull the permit. The Town expects this because they ask for his license and his insurance information, which I am not privy to. His bid always includes and estimate of the fee. However, sometimes circumstances lead me to do this, and I always include the amount as a reimbursable. I also believe the Building Permit is part of the construction process, which is properly the realm of the Contractor. If the Town has a problem with the conduct of the work, they should contact the contractor not he Architect. The Building Permit could be interpreted as part of his means and methods responsibilities. 

Two words - "reimbursable expense."  Reimbursable expenses can include a mark up as outlined in the agreement between the architect and owner.  That is the way that I handle it.  If an owner wants to pay more on top of the permitting fees, then I'll front them the money.  If they go through the process and decide not to pay me, then I file a preliminary notice of lien.  I have had to do that once in 25 years.  Of course when that owner got the notice he paid.

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Ken Brogno AIA
Architect
AIA, LEED AP
San Francisco CA
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Original Message:
Sent: 02-18-2011 12:27
From: Suzan Lami
Subject: re: permit fees

I can understand an architect working on a residential design not wanting to pay a permit fee, but for many types of architectural practices it makes sense to pay the fees for their clients.  If you are in a service business  (That's what architecture is!)  you should set up your business practices so that you provide service to your clients that have a meaningful impact on the final results. And in some cases, this means paying the permit fees upfront.     We work for retail, restaurant and corporate clients. For many of them, getting a check cut to a building department can take two weeks.  This would cause a terrible delay in these tightly scheduled projects. Yes, we have to plan our cash flow to 'get ahead of the game', in order to be able to cover the costs, but the 'payback' is immeasurable.  A client that understands that you are a partner in their success will not only come back again and again, but will refer work to you.  I think of the small amount of interest lost on that money as marketing costs.   And in over 15 years of business, and literally hundreds of thousands of dollars paid out in permit costs every year, we have never once yet been burned.   (knock on wood......!)  This might be a chance for architects out there to take a look at their own policies and practices, and think about how they can improve / change them to benefit the relationship with the client.

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Suzan Lami AIA
Lami Grubb Architects, L.P.
Pittsburgh PA
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I couldn't agree more with this thoughtful response.  Any procedures and services that help the architect maintain control of the project, and therefore the outcome, should be encouraged.  I believe that loss of control to other parties is the key issue that has diminished the importance of architects in the current business community.  Of course control and benefit to the firm have to be balanced against risk, but paying for permits, if integrated well into the contract, is not a high risk action.

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Heidrun Hoppe AIA
Heidrun Hoppe Associates, Inc
Evanston IL
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Original Message:
Sent: 02-18-2011 12:27
From: Suzan Lami
Subject: re: permit fees

I can understand an architect working on a residential design not wanting to pay a permit fee, but for many types of architectural practices it makes sense to pay the fees for their clients.  If you are in a service business  (That's what architecture is!)  you should set up your business practices so that you provide service to your clients that have a meaningful impact on the final results. And in some cases, this means paying the permit fees upfront.     We work for retail, restaurant and corporate clients. For many of them, getting a check cut to a building department can take two weeks.  This would cause a terrible delay in these tightly scheduled projects. Yes, we have to plan our cash flow to 'get ahead of the game', in order to be able to cover the costs, but the 'payback' is immeasurable.  A client that understands that you are a partner in their success will not only come back again and again, but will refer work to you.  I think of the small amount of interest lost on that money as marketing costs.   And in over 15 years of business, and literally hundreds of thousands of dollars paid out in permit costs every year, we have never once yet been burned.   (knock on wood......!)  This might be a chance for architects out there to take a look at their own policies and practices, and think about how they can improve / change them to benefit the relationship with the client.

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Suzan Lami AIA
Lami Grubb Architects, L.P.
Pittsburgh PA
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I agree with Thomas completely. I have paid fire dept review fees before on commercial projects to expedite the process, but these never amount to more than a few hundred dollars and are part of my reimbursables under my contract. Permit fees in AZ have to be paid by the GC. Plan review fees are normally paid up front by the client. And I have taken the client with me quite a few times to see the process. Its amazing how much more they appreciate what we do down at city hall for them.

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Ronald Peters AIA
President
HistoricStreetscapes PLLC
Mesa AZ
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