1 / 11

Comprehensive Fee Calculation and Management Practices for Design Professionals

This guide outlines the fundamental principles of fee calculation and practice management tailored for design professionals. By breaking down direct, indirect, and fixed costs, it provides insights into establishing charge-out rates, assessing project costs, and managing profitability. The principles emphasize compliance with professional codes, satisfying client needs, and achieving a sustainable profit. Additionally, it covers risk assessment and resource allocation to ensure effective project execution and financial viability in design management.

tibor
Télécharger la présentation

Comprehensive Fee Calculation and Management Practices for Design Professionals

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Fee Calculation from first principles • Setting up Practice • Income – outgoings=profit • Aims of being in practice • Design and manage good architecture • Comply with the professional codes • Satisfy your clients • Make a profit • An overview of the general principles Design Management Practice CMcNeish PSA University of Strathclyde

  2. Derive Costs • Direct Costs • Direct costs are related to the no. of hours worked by staff on fee earningactivity • 52weeks x 5days=1820 hours (7hour day) • Less annual leave 20 • Statutory holidays 10 • CPD 5 • Sick days 4 • Admin. 1 • Total 40days 15% (44 weeks) • Professional staff 85%,associates 70%,partners 60%,40% • Relative fee earning capacity differs for each level of staff Design Management Practice CMcNeish PSA University of Strathclyde

  3. Derive Costs • Indirect Costs • Indirect costs are the inverse of these amounts: • Professional staff 15% • Associates 30% • Partner 1 40% • Partner 2 60% • Admin Staff 100% • NIC 12% • Pensions 6% Design Management Practice CMcNeish PSA University of Strathclyde

  4. Derive Costs • Fixed Costs (overheads) • Space: • heat/light/fri lease 45k • Telephones 5k • Vehicles/Travel Expenses 20k • Equipment: • Computers 25k • Consumables 4k • Renewals and repairs 10k • Invisible: • Depreciation 8k • Insurances (PII, Employers, Contents) 21k • Tax 6k • Professional fees (legal, accounting) 7k • Bank charges 6k • Petty cash 15k • CPD training 4k • Marketing 7k • Membership fees 4k Total £190,000 Design Management Practice CMcNeish PSA University of Strathclyde

  5. Derive Costs • FIXED COSTS (overheads) • Space: • Rent, Rates and FRI Lease 78k • heat/light 6k • Telephones 9k • Vehicles/Travel Expenses 22k • Equipment: • Computers 45k • Consumables 14k • Renewals and repairs (equip, fabric) 23k • Invisibles: • Depreciation 10k • Insurances (PII, Employers, Contents) 32k • Professional fees (legal, accounting) 12.6k • Bank charges 3k • Postage and Prints 13k • Petty cash/misc contingency 6k • CPD/Staff training 5k • Marketing 4k • Membership fees 2.4k Total £285,000 Design Management Practice CMcNeish PSA University of Strathclyde

  6. Derive Costs • Notes: • These fixed costs are what must be paid before you earn a penny! • The salary bill comes round relentlessly at the end of each month! • The VAT man is unyielding and must be paid (first) quarterly! • Total Costs before Profit=Direct +Indirect +Fixed Costs Design Management Practice CMcNeish PSA University of Strathclyde

  7. Charge out rates • The relative charge out rate for each member of staff can now be calculated • Cost to the practice/hour =salary/1820 • Multiply this figure by the mark-up index to account for costs • Charge out rate =1+(indirect cost+ fixed costs) direct costs • Should be in the range (2.4 – 3.5) • Derive charge out rate : salary x index 1820 (excl.profit) • Equates to: salary in £k x 0.18p =£/hour (incl. profit) 100 Design Management Practice CMcNeish PSA University of Strathclyde

  8. Job Resourcing • Audit the work in progress • Value/scale/complexity for each project – tasksize • Determine the sector/programme/procurement - type • Define the extent of the service required - appointment • Programme the works • For each project • For each stage of RIBA plan of work (A-L) • For the pre-contract stages A-G • For the contract duration H-L/M • Allocate the staff resources/hourly rates • To each project • For each stage • Total Cost to the practice for each job Design Management Practice CMcNeish PSA University of Strathclyde

  9. Fee calculation from first principles • Assignment No.2 Design Management Practice CMcNeish PSA University of Strathclyde

  10. Job Resourcing • Assess the risks • Quick uncomplicated job? • Which procurement route? • Initiated or ‘lay’ client? • What statutory delays might occur? • Is it a difficult site? • Are you likely to be paid on time - or even at all? • What risks of acting as ‘lead consultant’? • Check staff resources • Other current work load • Holidays • What if staff leave? • Add profit • Increase if there is a ‘fear factor’ • Reduce if there is room to manoeuvre Design Management Practice CMcNeish PSA University of Strathclyde

  11. Submit the fee offer • Check the % fee scale • Assess the income =check contract sum x %fee • Outline the invoice plan over the period of the job • Anticipate payment dates / likely delays • Add to the cash flow projection • Confirm the details in writing to the client • Outlining the client’s duties under the CDM Regulations • Enclosing all the appointment documents for signing • Clarify the programme and the next action required Design Management Practice CMcNeish PSA University of Strathclyde

More Related