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Building with an independent architect

Ten arguments for building with an independent architect
Source: IWW Institute | Issue 08/2007 | Page 18

1. Can a property developer offer you lower prices?

Despite its grandiose claims, building with property developers does not save you money. A brochure from the State Administration for Property and Building Construction about the construction of the tax office in Ludwigsburg proves this.

Construction of the tax office in Ludwigsburg as evidence
During a nation-wide pilot phase in 1988, various models for the construction of the tax office in Ludwigsburg were investigated. The different models were from a general contractor with specifications according to specialist lots, financing offers and investor solutions. Result: Tender by lots, i.e. separate trades, was the most cost-efficient solution. A GC providing a range of services came in at second place with additional charges of 5.18% (see also point 5), followed by an investor model with additional charges of 9.24%, and then a GU with lots with additional charges of 15.74%.

The government decided on the conventional method of tendering by separate trades. This method yielded clear financial benefits compared to hiring a general contractor.

2. Can a planner offer construction services at low prices?

By working with architects who function as trustees, you get lower prices for construction services than you would with a GC. The reason: Tradespeople have a set price for a given amount of work. This price can be offered to the GC as well as to you and your architect.

But the GC must add the following costs:

  • Receiving and reviewing offers.
  • Supervising the work on-site and processing subcontractors’ invoices.
  • Acquired risk in the event that the company carrying out operations is no longer liable (by insolvency within the warranty period of five years, for example).
  • Profit mark-up.

Additional costs are also incurred when an intermediary is used. When purchasing a product, it is always more expensive to buy it from an intermediary than directly from the manufacturer.

3. How much influence do you have on the selection of the construction company?

As architects, we contact the firms that you suggest and that we both agree are suitable for the project. Our architects’ invaluable experience will help you select competent tradespeople. In this way, defects and corrections during construction are avoided from the outset. And there is no risk of an unexpected rise in costs due a delay in the project.

GCs do not generally permit you to choose a company without adding additional costs. They may even contract companies located far away or from low-wage countries for critical tasks such as electrical work. This can often lead to difficulties in future installation work, acquiring replacement parts and other tasks. You also have to consider your own “in-house electricians” who are available within minutes. They will certainly not be keen to take over general maintenance after an unknown company has carried out the installation.

4. Do property developers really lighten your workload?

If you use a property developer who delivers you a fully finished building, you may save yourself time and money on paper, but only if

  • you don’t question whether the price is justified for the services provided,
  • you are not concerned about whether you could have had a better result for the same price,
  • you don’t want to know whether the building materials meet your standards,
  • you are prepared delegate decision making – or more importantly the supervision of decision making – to an individual or company that is anything but unbiased.

On the other hand, an independent architect, as your trustee, can offer you as much work and responsibility as you wish.

5. Does a property developer guarantee its services and quality?

A property developer’s qualifications and services are the basis for a successful project. It is important to pay close attention to certain aspects. Descriptions such as

  • “white high-end tiles in bathroom”,
  • “interior doors with veneer coating” and
  • “white plastic windows, glass u=1.1”

do not describe services; they are functional descriptions or descriptions of conditions not of quality.

Because property developers are businesses that aim to maximise profit, they may use products that fit the specifications but are cheap and will only last the five-year warranty period.

Example: tiles
The description of tiles given above contains no information about the type of tiles (e.g. stoneware, earthenware or porcelain). Information about the specific applications for these tiles is also missing.

Our tip: a more meaningful description that could also be used when comparing offers for tiling would be

“Miliosa tiles, first choice, 30/60 cm, wear-resistance group III, multicoloured, R10 slip resistance, thin bed installation using polymer-modified mortar , light grey grouting”.

Example: doors
When it comes to doors, factors such as the climate class, the quality of the door leaf (e.g. honeycomb, tubular chip strips, tubular strip board or solid particle board), the manufacturer, the material and the quality of handles must all be considered.

As you can see from these examples, it is common for property developers to provide specifications that make it impossible to compare offers. The company that offers the cheapest tiles and doors wins the competition, regardless of whether they meet your expectations.

The qualifications of the property developer and especially its subcontractors constitutes a further problem: “The damages are foreseeable, mistakes are a given”, observes Rüdiger Mattis, board member of the German Association of Private Building Contractors. “More and more property developers are working with unqualified subcontractors. In order to cut down on costs, they look for the company with the lowest prices. Whoever wants to hire a property developer and turnkey service provider should definitely have the contract reviewed by an independent building surveyor before signing it”, advised the independent building expert.

6. Planning costs also accrue with a developer

Property developers like to advertise that, unlike working directly with an architect, planning and architect costs are eliminated or kept at a minimum. This is a myth. The facts about two myths:

Myth 1: GCs have no planning costs.
Regardless of whether you hire us as independent architects or if you work with a property developer, planning costs will always accumulate. Everyone must render the services identified in section 15 of the HOAI (the German Fee Scale for Architects and Engineers).

These costs will be presented to you in a more transparent and comprehensible way when you work with an architect. However, when working with a property developer they are often included in a package and tacked onto the construction costs. Whoever says that there are no extra costs either does no planning or supervision or allocates the costs to other categories.

Myth 2: GCs have no planning costs. Architect costs are higher than GC planning
A point that is often made is that architect costs are more expensive than the costs of the GC’s planner. The question arises about the qualifications of the planners and whether they are so much less expensive than an architect. Is this person with whom you are entrusting your construction project a qualified architect or simply a staff member who was trained on the job?

Conclusion: Just as in every other industry, highly qualified and experienced specialists are needed for certain jobs. Furthermore, the law does not allow for price competition when architect services are required. This applies regardless of whether the planning services are rendered by an independent architect or a GC (see also point 10).

7. Who is better and less expensive at supervising projects on site?

As independent architects, we are responsible for construction site supervision as it pertains to service phase 8. 31% of our entire fee goes on supervising construction work. One-third of our work is therefore on site supervision.

On the surface, these costs do not arise with a GC. However, they do accumulate internally as the GC must review the work of its subcontractors. You as a client must therefore ask yourself: Who supervises the GU to ensure that it properly supervises construction?

Independent architects carry out this task in service phase 8.

Architects coordinate each individual crew and ensure that they work according to the latest technology, the expected quality and the planning and description agreed upon. We develop a time table and ensure that it is adhered to. We require companies to eradicate any defects, assist you in the contractual acceptance of services, prepare measurements with construction firms on site and check invoices for their technical and analytical accuracy.

During the principle construction phase, the construction supervisor must be present at the construction site daily and often multiple times per day.

Is a shorter construction time actually a “special service” offered by a GC?

The supposed short construction time is often touted as an advantage of “everything from a single source”. However, it is important to understand that the conditions of and the adherence to planned construction times do not depend on the company’s mode of operation, but rather on planning, the type of structure, the availability of personnel and equipment and their professional management.

Conclusion: In this regard, experienced, competent architects prevail over turnkey-ready service providers.

8. Is a property developer a “trustee” like an architect?

Independent architects were and are required to act as the client’s trustee. The architect practices his or her work according to the principles of the independent professions and must uphold this independence. As a trustee, the independent architect must

  • advise you on the development of the building,
  • recommend the most economic and competent construction firms,
  • inform you about the best (and newest) construction products,
  • supervise and guarantee flawless construction,
  • represent your interests in dealings with subcontractors.

The architect can only guarantee this as an independent trustee. A GC cannot be seriously regarded as a trustee or agent. In reality, the GC is much more a contractual partner whose principle aim is profit. This is made clear in a verdict by the Court of Professional Conduct of the State of Baden-Württemberg in 1988.

The verdict states:

“[...] A company that erects a building on its own account and offers it turnkey-ready will give its best effort to render good services. It shall not be presumed that the company does not desire to give its best. However, in contrast to independent architects, it earns its money by constructing a building ‘cheaply’, concealing defects, etc. Especially in crisis situations, there exists the danger that, in the effort to cut back on costs, it will aim to increase its profits and reduce its losses. This disqualifies the company from acting as a trustee. It is instead a ‘contractual partner’ that aims for profit and whom one should monitor with all due vigilance. An ‘independent architect’ is needed to monitor this company. [...]

9. Is the risk you take with architects the same as with GCs?

Point 9, which makes the case for working with an independent architect, is that the financial risk for you is considerably lower than with a GC.

Risk 1: Who is the contractual partner in a GC contract?
The first question you should ask when working with a GC is who is behind your contractual partner. It is often small operation with a small office that offers you a multi-million pound project. What will happen if this company encounters difficulties during construction? Even if they are backed by sureties, there will be delays, endless litigation and negotiations that will set you back. Would you do business with these companies and service providers?

Risk 2: Excessive payment plans
When working with property developers, excessive payment plans are no rarity. This puts you at risk: if the property developer claims insolvency, you are left in the cold with an unfinished building. Moreover, you will lose any money you have already paid. Property developers are typically limited liability partnerships and are only liable for their own assets in the case of insolvency. This will not cover any damages.

While it’s true that you have no guarantee that everything will go as planned when allocating each task directly, the entire project will not be at jeopardy if one thing goes wrong.

10. The advantage of separating planning from construction

By hiring an architect as an independent advisor and trustee, you have acknowledged the most important principle of building projects: the clear separation between planning and construction.

While some try to sell the concept of a single service provider offering both planning and construction services, this can quickly become a problem in practice. A company that offers both services always has profit in mind. Instead of tendering out services, a company often works with fixed contractual partners. When this is the case, there are no independent third parties to monitor quality and prices. Risk surcharges are then often included that are distinct from actual accrued costs.

An architect, however, acts as this independent third party. She or he ensures that the quality is up to standard and that costs are kept transparent, advises you with comprehensive specialist knowledge, and coordinates and monitors all parties involved in the construction project.

You will always be able to keep track of where your money is going. Architect fees are clearly and contractually established by the legislature in the German Fee Scale for Architects and Engineers (HOAI). This means that all architects charge the same fees for their services. They therefore compete against one another not by offering the best prices, but by offering the best quality.

Source: IWW Institute | Issue 08/2007 | Page 18 | ID 111658
by Rolf Weber, independent architect, Gosheim