Housing and commercial uplift send average fees higher – but hourly rates fail to keep up with inflation
Fees are heading upwards. It’s not a dramatic move, but year by year we’re recording an improving picture. The Fees Bureau’s annual survey has been monitoring architects’ fees for nearly 20 years. The Architects’ Fees Index is now at its highest point since the survey started. After plunging during the recession, there was a significant uplift in the Index two years ago, followed by consolidation last year. Those increases were largely on the back of an improvement in the fees charged for private housing work. Now we see a further rise, pushed up by strengthening fees for commercial work – as well as a continued upward move in residential fees (particularly refurbishment) and public sector work. This year’s uplift brings The Fees Bureau Architects’ Fees Index to its highest ever level.
The Architects’ Fees Index takes account of jobs of all values and contract types. Delve a little further into the detail of the stats, and we can see that the upward move is not applied consistently across all sectors, all values and all contract types. Architects Fees reports on 40 different market sectors, for the two main contract types (traditional and design and build), and separately for new build or refurbishment jobs. It’s noticeable this year that, in many sectors, new build average fees are higher for small traditional contract jobs, but lower for large ones. Private housing emerges as one of the most buoyant sectors with average fees rising across three out of four build / contract type permutations. Average fees have moved higher for new build retail work up to about £4 million, and for new build leisure work valued above that. Office and leisure refurbishment fees have moved up, too. Industrial work looks least healthy, with average fees lower in two build / contract types and unchanged in the other two.
The pattern of a non-uniform rise is reflected in the overall results; the average fees line has moved up from last year for work up to at least £3 million for both new build and refurbishment under the traditional form of contract; but the average fees line is the same, or lower than last year’s, for larger jobs. In particular, the average fees line for refurbishment work (traditional contract) is lower for work over £5 million. The design and build average fees line is similar to that of last year for new build, while for refurbishment it has moved lower for small jobs but higher for larger jobs.
This year we have introduced a regional fees multiplier, and an hourly rates multiplier, which subscribers can apply to the data and refine the UK averages. The fees multiplier is highest for London, closely followed by the South East, and lower in Wales, Scotland and Northern Ireland.
We also wanted to know how much of the total fee is accounted for at each of the RIBA work stages. The research shows that two thirds of architects’ fees relate to design work. We have asked a similar question of consulting engineers; their fees are rather more loaded towards design. While two thirds of architects’ fees relate to pre-construction design work, for engineers the proportion rises to three quarters.
The survey records hourly rates charged by architects, and this year’s figures show little change on the year. Most staff types’ average rates are broadly the same as last year’s – or slightly lower. The uplift we have recorded in average fees does not seem to have been carried through to average hourly rates. For sole principals, the rate has increased only very slightly, to £88 per hour, but remains slightly lower than the peak value recorded two years ago.
The Fees Bureau conducts similar fees surveys among consulting engineers (civil, structural and M&E services engineers) and quantity surveyors. Compared with these professionals, there’s good news and bad for architects. The profession’s average fees record a slightly larger rise than those of civil & structural engineers, and about the same as quantity surveyors. But surveyors and engineers have been slightly better than architects at raising their hourly rate levels over the past 12 months. Both QS and engineers’ rates have kept up with inflation; architects’ average hourly rates have not.