A client’s decision to accept or reject a design professional's proposed fees is often related less to the amount of the fees than to the client's ability to defend those fees to other stakeholders. The corollary is also true: design professionals often unnecessarily reduce their fees when repackaging them would yield better results.

Last year, I was retained by an A/E team to negotiate their fees with a new client. The client, a school district in California, was used to paying A/E teams according to a previously mandated state fee schedule. Although the fee schedule was no longer in effect (state regulations had changed), the district's project manager was determined to use it to set a maximum fee amount.

From the A/E’s perspective, the fee schedule was grossly inadequate for the complex building types included within their scope (e.g., performing arts center, specialized classroom labs, and full-service kitchen) and for the comprehensive set of services this school district requested. The client’s project manager tensed when we explained why our team required fees that exceeded the maximum amounts allowed in the schedule and that the district had used on their last half dozen projects. The project manager rejected our proposed fees and refused to budge.

We remained at an impasse over the following two weeks while we tried in vain to convince the project manager to accept our higher fees. We illustrated our anticipated effort via elaborate spreadsheets and staffing projections and identified those services the client requested that were not included within the scope that the outdated fee guidelines were initially based upon. No amount of explanation about the inadequacy of the fee schedule satisfied the client’s project manager.

The breakthrough came when the project manager, exasperated by our determination, told us that no matter how reasonable he deemed our arguments, he simply could not defend our proposed fees to the school superintendent and the school board. At that point, we knew our mission hinged on helping him present our fees to his superiors.

We drafted a new letter to the project manager that clearly outlined how the school district would benefit from paying our team higher fees, described why most of the project components were more complicated to design and document than other school components, quantified the amount of our fees that related to the district-requested tasks that fell outside the fee guidelines, and, through a set of bulleted points, explained why the outdated fee schedule was inadequate. The letter also included references from other school districts that had agreed to fees similar to those we proposed and a long list of deliverables that our proposed fees supported. We kept the language simple and concise.

With this letter, the district’s project manager felt that he could easily defend our fees. He incorporated most of the language in our letter, almost verbatim, into his report to the superintendent and school board, along with his recommendation that they accept our proposed fees. He used our letter as an outline and our bulleted text as talking points when he presented his recommendations in person. The school board expressed their gratitude to the project manager about the thoroughness of his analysis and voted to accept our fees.

Lessons Learned
1. Client representatives make safe and easily defendable decisions when negotiating.
2. Include language in fee proposals that clients can use when justifying your proposals to others.

Copyright 2002 The American Institute of Architects. All rights reserved.