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Agreement Between Client & Architect & Scale of Professional Charges

An agreement, or contract, is usually made between two or more parties. It


describes clearly the obligations each party undertakes, the manners in which
it performs such obligations, and the consequences it is willing to accept for
non-performance of these obligations. More often than not, it also describes
the privileges, or entitlement, each party enjoys in return for fulfillment of
obligations. It may involve the transfer of money, property, rights, or whatever it
is agreed between the signatory parties to be transferred. Lastly, it is common
for contracts to include provisions for resolution of dispute, in case the parties
cannot come to an agreement on certain points of the contract, and for
termination of contract under certain circumstances. Thus, the major elements
of an agreement, or contract, are:

Details of signatory parties


Obligations each party agrees to undertake
Privileges and entitlement in return for performance of obligations
Penalties for non-performance of obligations
Circumstances for termination
Provisions for dispute resolution

Often, a contract is witnessed by non-signatory parties, but this is not


obligatory. In some jurisdictions, certain contracts are required to be executed
under seal, which is essentially a form of direct taxation but in itself does not
alter the validity of a contract one way or the other. In a contract it is essential
that all signatory parties agree to the contents in free will, as any agreement
made under duress will render it null and void.

It is also important that the obligations, privileges, etc are clearly spelled out,
as the terms of the contract, taken at face value, are much more important than
the intentions the signatory parties attach behind them, in case of dispute.
There is no such thing as an unfair contract, provided that it is not against any
other provision under the law of the land in which it is executed, and that there
is no proof that it has been signed under duress. Hence, in Shakespeares The
Merchant of Venice, Shylock is entitled to his pound of flesh to be removed
from Antonio, even though it is morally repugnant, because it is in the letter of
the contract. Equally, the judge Portia has every right to rule that no blood
should be shed, because blood is not what Shylock is entitled to under terms

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of the same contract.

The wording of an agreement, or contract, is as important as, if not more


important than, its contents. Therefore, it follows that the task of drafting a
contact should fall on a suitably qualified person, who is, more often than not,
someone other than the architect. This is one reason why we have standard
forms of contract and agreement, which are the product of collective effort and
which correctly reflects the principles of common practice.

In the professional practice of an architect, the two most common forms of


agreement/contract encountered are:

Agreement between client and architect, and scale of professional charges


Building contract.

The Agreement between client and architect and scale of professional charges,
sponsored by the Hong Kong Institute of Architects, sets out in detail the duties
of a architect towards his/her client, the scope of service he/she is expected to
render to the client at various stages of a project, and the fees he/she is
entitled to charge the client, according to the nature of work and progress of
the project.

In giving detailed descriptions of the scope of work, the HKIA seeks to define
the nature and extent of the architects work, which best serve both the
interests of architect and client, and which uphold the ideals of the HKIA Code
of Professional Conduct. By dividing a project into stages, it provides a useful
checklist for architects to better organize their service to clients, and also
facilitates the charging of professional fees according to progress of work,
since the architect needs a steady inflow of cash to cover the expenses
normally incurred over the duration of the project.

Note that professional fees, other than time charges or out-of-pocket expenses,
are always calculated on percentage basis, according to the total value of the
project. The scale of professional charges is a recommended scale, and
therefore not mandatory, which means that members of the Institute are, in
practice, free to adopt it or not. The scale of charges used to be mandatory, but
was later changed to recommended for two reasons: firstly because a
mandatory scale was almost impossible to enforce across the HKIA

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membership, and, secondly, a recommended scale was more consistent with
the desired image of the HKIA, in not being perceived publicly as a cartel or
trade union. The undesirable side effect of abolition of the mandatory fee scale
has been that fees have become a major factor in the competition of work
among architects. This is especially the case with public projects, even though
Government often states that it is not its intention to push fees down and
adopts a two envelope system under which consultants are assessed
separately on their technical competence and their fee proposal.

In modern projects, it is seldom that the architect alone can render the full
range of services necessary to see them through from beginning to end. More
often than not, a team of other consultants, such as planners, traffic engineers,
environmental consultants, civil engineers, structural engineers, building
services engineers, acoustic and lighting consultants, quantity surveyors,
landscape architects, etc, are required to be engaged. These consultants may
be engaged directly by the client, and may also be engaged through the
architect. In both cases, the architect assumes the role of prime consultant, in
coordinating the work of sub-consultants from various other disciplines, and
therefore the architects scope of work should also reflect such reality.

The HKIA document comprises two sections: memorandum of Agreement, and


HKIA Conditions of Engagement.

Memorandum of Agreement

Page 1 identifies the following aspects:


Date agreement is made
Signatory parties
Nature, classification (under Table 1 of the HKIA Conditions of Engagement),
and location of the building project
Details of services to be provided, and whether they are normal or partial

Page 2 lists out the details of agreement between the parties, summarized as
follows:
1. Employer and architect both agrees to abide by the HKIA Conditions of
Engagement;
2. (A) Employer agrees to pay the Architect fees at the rate set out in Table 1
of the HKIA Conditions of Engagement, for services specified in Part 2 of

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the same Conditions. Employer also agrees to pay such additional fees as
may be prescribed under the said Conditions [applicable where no
percentage increase in fee is indicated in paragraph 2(B)];

(B) Employer agrees to pay an increase of % above normal fees and to


pay for additional services [to be deleted if not required];
3. Fees for partial services, if required, to be as shown in Table 1 and Table 2;
4. Employer agrees to pay the Architects fees on demand and by instalments
as provided in the HKIA Conditions of Engagement;
5. Employment and payment of Consultants to be in accordance with the
HKIA Conditions of Engagement;
6. Employment and payment of a Clerk of Works to be in accordance with the
HKIA Conditions of Engagement;
7. Employers right to use drawings or documents for the purpose of the
building, if the Architect dies or becomes incapacitated (provided fees are
properly settled);
8. Disputes, etc, to be resolved in accordance with Sections 6.4 and 6.5 of the
HKIA Conditions of Engagement;
9. Architects liability to Employer limited to that within the reasonable
contemplation of the Architect at the time of agreement.

Conditions of Engagement

Part 1 General

This part contains general conditions that apply to all kinds of commissions,
irrespective of nature or extent of services to be provided.

1.1 Remuneration

There is a distinction between normal and other services. Normal services


are divided into a sequence of Work Stages A to F.

HKIA recommends that fees for Stages A and B (and for those other services
which are likely to vary widely in nature and extent) should be charged on time
basis (see Part 5). Fees for Stages C to F are to be calculated as a percentage
of the total construction cost of the works (see Part 3).

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1.2 Consultants

Please note that fees of consultants should be calculated in accordance with


the fee scales of the appropriate professional bodies. The same principle
applies whether these services are provided under a single, multi-disciplinary,
firm or by consultants (from different firms) in association with the architect.
Provision of consultant services should be charged in addition to architectural
service.

Independent consultants and quantity surveyors should be nominated or


approved by the architect in agreement with the client. They should be
appointed and paid by the client.

1.3 Responsibilities

The architect must have the authority of his/her client before initiating any
service or Work Stage. Once the client has approved the design, the architect
shall not make any material alteration without the clients knowledge and
consent. Exception: when changes are found necessary during construction
for constructional reasons only. In such cases the architect should inform the
client without delay.

The architect has a duty to inform the client, if he/she has the reason to believe
that total authorized expenditure, in practice the agreed sums of main and
sub-contracts, is likely to be materially varied. The same applies for contract
period.

The architect has a duty to advise the client on the selection and appointment
of the contractor. The architect should also make periodic visits to the site, as
he/she considers necessary, to inspect generally the progress and quality of
the work, and to determine in general if the work is proceeding in accordance
with the contract documents (italics added by the author of these notes). Note
that the client does not determine the frequency of such visit or when these
visits are necessary.

The architect is not responsible for the contractors operational methods,


techniques, sequences or procedures, nor is the architect responsible for
safety precautions in connection with the work. The architect is also not

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responsible for the contractors failure to carry out and complete the work in
accordance with the terms of the building contract between the client and the
contractor. On matters relating to site safety, please also refer to relevant
Government legislation, which may differ from the HKIA Agreement.

1.4 Specialist sub-contractors and suppliers

The architect may recommend specialist sub-contractors and suppliers to


design and execute any part of the work. The architect is responsible for the
direction and integration of their design, and for general inspection of their
work (Stage F of Normal Services), but not for the detailed design or
performance of the work. Common examples are curtain wall systems and
external claddings.

1.5 Copyright

Laws governing copyright in general and copyright of drawings in particular are


very complex and we do not intend to discuss them in depth here.

Note that copyright in all drawings and in the work executed from them
remains the property of the architect, unless otherwise agreed.

Where an architect has completed Stage D, or where an architect provides


detailed design in Stage E, the client shall be entitled to reproduce the design
on the conditions that the client: has paid all the fees due to the architect, and
only uses the design on the site for which it is intended.

Where an architect has not completed Stage D, the client may not reproduce
the design without the consent of the architect and payment of any additional
fee that may be agreed in exchange for the architects consent. The same
applies where the client and architect have agreed that Section 1.5 shall not
apply.

Section 1.5.5 provides for withholding of architects consent where an


architects services are limited to making and negotiating planning and other
approvals. The circumstances involve arbitration and we will not discuss them
here in detail.

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Reference may be made to the Copyright Act 1956 (UK), the Copyright (Hong
Kong) Order of 1972 and the Copyright Ordinance 1984.

Part 2 Normal Services

Stages A and B occur before the architects brief (sometimes also called the
clients brief, if it is largely determined by the client) and the architect usually
charges on a time basis for work done during these stages. Stage C begins
where the architects brief has been determined in sufficient detail, and work
during this and subsequent stages is usually charged on percentage basis.

Please look up the HKIA Agreement for definition of the following work stages.
Very briefly:

A Inception
Generally an exploration of development potential and of possible course of
action

B Feasibility Studies
Understanding requirements, investigating restrictions imposed by government
statutes and preparing some very rough sketches to demonstrate the extent to
which the project can be carried out

C Outline Schematic Proposals


Preliminary plans and drawings prepared after analyzing the clients
requirements

D Project Design
Preparing well-developed sets of plans and drawings, which make it possible
for cost estimates and which may be ready for submission to the Building
Authority for approval

E Contract Documents
Submitting plans to the Building Authority for approval and completing detailed
design, production drawings and specification; preparing information and
documents for tendering; obtaining and advising on tenders

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F Building Construction
Obtaining consent from the Building authority to commence work and
instructing the contractor; making periodic site visits, certifying payments and
work completion

Part 3 Fees for the Normal Services

3.1 Total construction cost

This section gives some detailed descriptions of how construction costs are to
be calculated to provide the basis of fee charging. Please note that the total
construction cost shall be the cost, as certified by the architect, of all works
executed under his direction (Sub-section 3.1.1).

3.2 Reduction of scope of work for Normal Services under special


circumstances

This section lists the special circumstances where scope of work is reduced. It
includes the use of standardized design in part in Work Stages A to C and in
Work Stage E. It also includes omission of tendering process, reduction of
contract administration in Work Stage F, and appointment by a client with
established and familiar procedures. Read up the percentage of reduction
allowed in each case, which ranges from 3 to 6%.

3.2 Reduction for Repetition

Please note that no fee reduction is allowed for repetition of floors etc. within a
building. Where there are a number of identical blocks, full fees will be charged
on the first block, and 60% of the full fees for Work Stages D and E for each
subsequent block.

3.4 Addition to scope of work for Normal Services

It lists out the various kinds of work not routinely required of the architect in a
typical building project. The architect is entitled to charge additional fees.

3.5 Partial Service

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This section deals with fee reductions that may be offered if the architect is not
required to render full service. It lists out the various circumstances under
which the scope of the architects services is reduced, compared with normal
full services.

3.6 Fees may be calculated on estimated construction cost

Under the provision of this section, the architects fees can be calculated
based on estimated costs, provided these estimates are backed up by
professional expertise, and be allowed to remain the same to the end,
irrespective of actual tendered costs. This is to allow the client tighter control of
total expenditure.

3.7 Fees may be quoted as a lump sum

The provision under this section allows for fees to be calculated on a


percentage basis, after which they may be quoted as a fixed lump sum. This is
allowed only if services are defined and related to a programme agreed
between client and architect.

3.8 Mode and time of payment


This section describes in detail when and under what circumstances the
architect is entitled to payment of fees by installment, as against full payment.
It also allows the architect to claim interest against the client in case of late
settlement.

Part 4 Other Services

This section deals with services, which are optional, or not normally required
for building projects in general.

Part 5 Time charges and Out of pocket expenses

This section deals with costs that are either difficult to anticipate at the outset,
or which are isolated in nature

Part 6 Abandoned works and Interpretation

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This part deals with the modes of fee settlement when works are cancelled,
postponed or abandoned prior to completion. It also provides for interpretation
of the Conditions of Agreement by the HKIA, and for ways of dispute resolution,
including arbitration.

[End of Agreement]
JPLW 19.09.07

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