Perhaps the most common cause of dispute between architects and subconsultants results from a lack of understanding between the parties of the fees to be charged and/or the services to be provided. Using appropriate, understandable and clear agreements is one of the most effective ways of avoiding disagreement.
Terms of engagement and payment of fees
Good business practice and the interests of both architect and specialist consultant are best served by a written agreement defining the scope of work to be undertaken, terms of engagement, fees and terms of payment. Refer to the Institute's Architect–Specialist Consultant Agreement 2017 (ASCA2017).
The agreement, which confirms the appointment of the specialist consultant following the client's approval, may be in a standard form or by an exchange of letters, but should be a written agreement and as detailed as possible.
Where the architect has been engaged under a project specific agreement or other non-standard agreement the subconsultants should be engaged using conditions which mirror those applying to the architect's engagement. In this situation it may be prudent to seek legal advice on the preparation of the subconsultant’s conditions of engagement.
The agreement should be completed in the earliest stages of the project, usually prior to the preliminary design stage when the design, documentation and construction program has been generally established and an estimate of the cash flow for design and documentation fees can be made. All parties will then be aware of not only the total fees payable, but also the financial arrangements agreed upon for the progressive payment of fees. The design may include a significant specialist consultant’s input and, if so, this specialist should be involved from the start.
The agreement should state the number of copies of documents which will be supplied, to whom and when. This does not include copies of documents used in the coordination process as the project evolves.
Although a basic total fee may be agreed there should also be a schedule showing a detailed break down by stages. Each stage and element should have shown against it a percentage of the basic fee with a monetary sum allocated to it.
By constantly monitoring the amount of work carried out in relation to fees, both the architect and subconsultant are aware of the true value of the work done at any stage, and the schedule will assist them both in their assessments.
Risk management
The architect's liability arising out of the engagement by you of specialist consultants may be covered by your professional indemnity policy. However, you should first check with your broker that your policy covers you for liability arising out of instances where you have engaged the specialist consultant rather than a specialist consultant your client has engaged.
The architect should be protected by written agreements with all specialist consultants engaged directly, under which the consultant accepts responsibility consistent with the degree of responsibility the architect has to the client.
Whether liability is limited or not, the architect should request proof from specialist consultants of current and adequate professional indemnity insurance cover.
The amount of an architect's or specialist consultant's liability for negligent acts or breach of duty is generally unlimited (although the ACEA Guidelines may provide for a limitation on liability) and while a specific sum insured may be suggested as a minimum for a specialist consultant's policy, it may be difficult to establish an amount which is adequate and also within the premium range the specialist consultant is willing to pay.
Underwriters, of course, are not prepared to give unlimited cover. Architects must therefore seek the best protection for themselves and their client which is economically practicable. Your insurance broker should be able to best advise you on an appropriate level of cover for your practise.
Refer Acumen note Architect's liability for specialist consultants.
Default by consultants
Bankruptcy or default of a consultant is a rare occurrence, but one which can cause major problems for an architect. Risk can be managed by carefully selecting consultants and ensuring that they are only paid when there is clear evidence that their work is completed to the level defined.
The engagement should provide for prompt termination in the event of default or non-performance.
By constantly monitoring the amount of work carried out in relation to fees, both the architect and the subconsultant are aware of the true value of the work done at any stage, and the schedule will assist them both in their assessments.
Disclaimer
This content is provided by the Australian Institute of Architects for reference purposes and as general guidance. It does not take into account specific circumstances and should not be relied on in that way. It is not legal, financial, insurance, or other advice and you should seek independent verification or advice before relying on this content in circumstances where loss or damage may result. The Institute endeavours to publish content that is accurate at the time it is published, but does not accept responsibility for content that may or has become inaccurate over time. Using this website and content is subject to the Acumen User Licence.