Smarter Contracting

A successful outcome to a design/build project has as much to do with contracting smartly as it does with providing professional services. It’s important to understand what your firm’s focus is and then formulate contracts with terms that reflect the services and product you choose to provide. Consumer-friendly paperwork will set positive expectations.

As a business approach, determine a design niche and be true to your aesthetic ethics. From your first conversation with a new prospect, begin to ascertain whether the project and client are a good fit for your company. Not every job is worth your time or liability risk, although we’re all more willing to be more forgiving in this economic climate. So, learn to trust your sixth sense.

Develop a manner by which you “interview” prospects when they first call your office. Use this opportunity to ask as many leading questions as possible. Callers usually are seeking information and they will appreciate an informative exchange that will save everyone’s time. Understanding your product specialization will help you determine if the project is a good match.

For example, we seek projects that require a high level of architectural development, which we know will require a higher level of investment. Therefore, we always lead the conversation to budget on the first phone call.

Design/Build is an educational process for the consumer, and it’s in our interest to provide realistic information. Since clients are often reluctant to discuss budget parameters, we reference our online portfolio for examples of quality detail and corresponding range of cost. We can determine pretty quickly if the job doesn’t fit our criteria and refer them to another source, ending the conversation in a very friendly manner.

I believe in tailoring contractual agreements to meet the needs of the majority of clients rather than worrying that certain terms might not work for all. On the other hand, we are always flexible and open to negotiating terms in order to earn the job if it’s a request within reason.

It’s important to recognize that the financial growth of your design/build business will be determined by construction profits. One of the most important lessons I have learned in my design/build career is to tie design and construction together contractually. This leap has resulted in our conversion of nine out of 10 projects to construction and provided for steady cash flow and structured growth. Great architecture is still critically important and will set you apart, but it’s doubtful that architecture will be your primary profit center because most clients underestimate the impact of good design.

About 10 years ago, we made a fundamental change to our architectural contracts. We converted the document from an “Architectural Services” to a “Pre-Construction” contract. We still provide similar design services with similar fee structure, but we added the binding caveat that document ownership conveys only upon construction completion. Unless our company is contracted for construction, the documents are not released and the project cannot be built. This is a very reasonable position for you to take if it’s understood that architectural services are available only with construction commitment.

Being flexible and open to customizing terms to accommodate your client’s particular concerns goes a long way to building good will. For instance, if a client strongly objects to the terms regarding document ownership, we compromise by offering to release the documents at the start of construction rather than upon completion. Obviously it requires a large dose of good faith from your clients to commit to turnkey services, and it will be your expertise and reputation that ultimately will make it palatable.

Until you provide a good estimate of cost, neither you nor your client will be able to ascertain whether the project is viable for construction. That’s why cost is such an important design tool. We provide a well-studied preliminary cost at the same time we present preliminary floor plans and preliminary specifications, at which time the client will have invested a proportionally small amount of time and money. If the client is dissatisfied for any reason, they can terminate the contract but the creative work to date will remain our property.

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